The last weekend (June 11-12, 2022), Bitcoin lost its support in the $26 - $30,000 range. This past weekend on June 18, Bitcoin slid to below $20,000. This is the lowest level since December 2020.
Markets continue to unwind in their view that cryptocurrency prices are independent of stock markets and inflation. Nasdaq’s over 20% plunge pulled Bitcoin and Ethereum lower. The Federal Reserve’s shocking 75 basis point hike triggered margin calls for big bitcoin investors. Bitcoin investors had to sell to meet those obligations. This set off a crash in TerraUSD and Luna.
Celsius froze withdrawals last week to avoid a crypto run. Unfortunately, it raised panic levels for BTC investors.
The Fed’s engineered recession is pulling the biggest crypto lower. Bitcoin risks breaching its 2020 lows. Similarly, Ethereum, a rival cryptocurrency, lost around 73% of its value this year.
Lost Confidence
Bitcoin’s price depends on the buyer’s perceived value. It is similar to real estate, only it is not a physical good. In real estate, the price of a home depends primarily on what the buyer is willing to pay.
Now What?
Be wary of buying BTC for now. Higher interest rates increase borrowing costs. Platforms that rely on leverage will suffer. Customers face worse service quality on platforms like Coinbase. Coinbase cut thousands of staff.
