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Crypto prices took their last dramatic leg down late Tuesday.
Dusan Zidar/Dreamstime
Bitcoin
Prices plunged to their lowest levels all year on Wednesday, dragging down the rest of the cryptocurrency.
The price of Bitcoin fell 6% in the past 24 hours to below $18,800. The largest crypto briefly touched its all-year low of $18,582, according to Dow Jones Market Data, trading well below the $20,000 to $25,000 range where it has stagnated since a mid-June sale, it dropped from $30,000.
“Retail is starting to panic again,” said Edward Moya, an analyst at broker Oanda. “Bitcoin Breaks Below Key Technical Levels.” The analyst believes that selling pressure makes Bitcoin vulnerable to a fall towards $17,500.
Other analysts have offered even more pessimistic price targets over the past week as Bitcoin fell below the key $20,000 level and struggled to bounce back above it.
Bendik Norheim Schei, head of research at crypto firm Arcane, has said that it is “dangerous” to predict where Bitcoin will go next, but the group is preparing for the next major support level for Bitcoin at $16,000 on a weekly scale.
Naeem Aslam, an analyst at brokerage AvaTrade, has said that even the bullish traders who have helped prop up prices are unlikely to be able to stop a slide below the yearly low, with $15,000 as a key psychological support level .
What happens next is anyone’s guess. A complex array of factors – largely beyond crypto – are pushing Bitcoin prices.
While cryptos should in theory trade independently of mainstream finance, they have been shown to be highly correlated to other risk-sensitive assets, such as stocks. Digital assets have been weaker of late in the middle
Dow Jones Industrial Average
and
S&P 500
three straight weeks of losses.
Investor sentiment for risky bets has faded amid inflationary pressures, recession worries and the likelihood that central banks such as the Federal Reserve will continue to tighten financial conditions and dampen liquidity. This has partly manifested itself with an increase in the dollar, with
US dollar index
—which measures the dollar against a basket of six peers—and hit a new 20-year high on Wednesday.
“With weakness in almost every other currency pair, the pressure on equity, bond and Bitcoin markets remains the same,” analysts at crypto market intelligence group Glassnode said in a note on Monday. “For Bitcoin specifically, the underlying market is very similar to the macro scene, with a volatile and uncertain short-term, while the long-term outlook is more consistent and characterized by well-developed trends.”
There was a sea of red in crypto beyond Bitcoin.
Ether,
the second-largest crypto — which has had a big boost lately from growing anticipation around a key upgrade called The Merge — fell 8% to nearly $1,500. Smaller cryptos, or altcoins, were unspared, which
Cardano
lost 7% and
Solana
discard 5%. Memecoins – originally intended as internet jokes – also fell, too
Dogecoin
down 6% and
Shiba Inu
4% lower.
Write to Jack Denton at [email protected]
