Yesterday’s trading session was one of the worst for Bitcoin after the cryptocurrency lost 15 per cent of its value. The drop was a continuation of a six-day bearish trend that has seen the price slide from trading at $31500 to the current $21800 price level.
The cryptocurrency industry has been hit hard in the first half of 2022, but few days have been as bad for Bitcoin as yesterday. Part of the reason for the massive drop has been investors’ fear of holding risky assets.
The past few days have seen multiple trading platforms announce the halting of withdrawals. This includes large companies such as Binance and Celsius, which halted withdrawals. There were also reports indicating staff layoffs, which included Celsius rivals, BlockFi, which cut staff by 20 per cent. The halting of withdrawals came amidst a six-day losing streak for Bitcoin, which had seen its price drop by more than 20 per cent.
Weeks before the current Bitcoin crash, there were also concerns about Celsius, a popular crypto staking and lending platform that promises yields of up to 18 per cent on deposits. The platform’s token had dropped from $7 to about 33 cents in the last year. However, the rate of the drop has increased in the past few weeks, with the last one week showing a drop of over 50 per cent.
The company’s more than $26 billion in assets under management have also halved since October, a major concern to investors. Therefore, investors were already nervous about the markets, which might have triggered the current Bitcoin drop.
The sell-off may also have been contributed by the current macroeconomic headwinds and rising interest rates. Investors have also become warier and have been moving their investments away from risky assets, which include cryptocurrencies.
In today’s trading session, the Bitcoin price is down by 3 per cent. The cryptocurrency is also looking likely to continue with the aggressive bearish trend throughout the session. Using the chart below, we can see the prices breaking downwards after hitting the $28,000 support level.
We can also see yesterday’s strong bearish move that resulted in a 15 per cent price drop. Today, being a continuation of the past seven days that have seen strong bearish moves, it is likely that we will continue to see bearish moves in the next few trading sessions.
Part of the reason why Bitcoin prices are dropping is due to the current market forces that include macroeconomic headwinds, rising interest rates, the laying off of staff from Bitcoin-reliant firms and the halting of Bitcoin withdrawals from top Bitcoin management firms.
Unless these fundamentals change, I expect Bitcoin prices to continue in their current bearish trend. I expect to see prices trading below the $20,000 price level in the next few trading sessions. In the worst-case scenario, where the current market factors do not improve, there is a small chance that Bitcoin may go as low as trading below the $15,000 price level.
However, if the market conditions listed above change, then my bearish price analysis will be invalidated. We may also start to see a recovery of Bitcoin.
This post was last modified on Jun 14, 2022, 08:02 BST 08:02