While bearish sentiment has engulfed the financial markets, experts are considering whether Bitcoin’s price will drop below $ 20,000 and what could happen if it did.
Some experts believe that Bitcoin will fall further
Bitcoin is currently approaching $ 20,000, with the price of ATH plummeting from $ 69,000 right now. All eyes are on the $ 20,000 support right now. This level is also the peak of Bitcoin’s last bull run in 2017. In previous bear markets, Bitcoin has never fallen below the price marked by the peak of the bull run. The difference this time around, however, is that Bitcoin has come closer than ever to this level.
Sam Callahan says the 80% drop is possible for Bitcoin
Swan Bitcoin analyst “Sam Callahan” shared his predictions based on the experience of previous bear markets. The analyst says that Bitcoin could drop by more than 80% from the ATH level, as it did when it dropped to just over $ 3,000 in December 2018. This means that Bitcoin has dropped as much as $ 13,800 in this cycle. But Callahan isn’t that worried if he is. The analyst says:
It is important to note that Bitcoin’s investor base is very different and more complex than previous bear markets. If Bitcoin dips below $ 20,000, I think we will see significant buying pressure at these discounted price levels as Bitcoin’s long-term value proposition remains intact.
Yuya Hasegawa, a cryptocurrency market analyst for Japanese cryptocurrency exchange Bitbank, shares this sentiment. Last month, Hasegawa said Bitcoin could drop as low as $ 12,200 during this bear market. But now, his outlook is more optimistic. According to Hasegawa:
I think Bitcoin could temporarily drop below $ 20,000. However, it will likely recover the surrounding level quickly.
But not everyone is that optimistic about Bitcoin
Global Block analyst “Marcus Sotiriou” believes $ 20,000 will bring further downside. Sotiriou highlighted the controversy surrounding cryptocurrency lending company Celsius, the possibility of the company going bankrupt, and the glaring liquidity crisis that forced it to suspend all user withdrawals earlier this week. In his current analysis, Sotiriou missed:
Celsius is in big trouble. If whales investing in Bitcoin and Ethereum are liquidated, this will cause more negativity. I think many fear a cascade of liquidations will occur as Celsius is called margin and currently has a liquidation price of around $ 17,000 in BTC positions.
Forced liquidations occur when investors have to unexpectedly and inadvertently close Bitcoin derivative accounts (such as futures and options) after reaching insufficient collateral to hold such positions. This type of forced sell puts further downward pressure on the Bitcoin price. This then threatens the price with further declines. It also causes more liquidation.
Arthur Hayes expects these levels in BTC and ETH
Arthur Hayes, the former CEO of BitMEX, also highlighted the potential of this type of risk on Twitter yesterday. Pointing to the crypto derivatives market, Hayes noted that most of the open positions (the number of futures and options contracts yet to be settled) are currently $ 20,000 for Bitcoin and $ 1,000 for Ethereum.
Hayes explained that as the market approaches these levels, investors with open positions will need to sell their cryptocurrencies on the spot market to hedge their positions. If these levels break, says the former BitMEX CEO, “we can expect tremendous sales pressure” in the market. To make matters worse, Hayes advises cryptocurrency investors:
You can turn off the computer because the graphics are useless for a while.
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