If bitcoin dips below this level, it could be game over for the cryptocurrency. And it’s only $87 away from that point.
The world’s top ranked cryptocurrency is just $87 away from slipping into oblivion.
In the last 24 hours, bitcoin hit a low of US$$20,087 but was trading slightly higher at time of writing, at US$21,920.
However, several experts have warned that if BTC dips below the all-important $20,000 mark, it could spell disaster for the blockchain.
One trading pro has warned that if bitcoin slips below $20,000 and ethereum below $1000, then “massive sell pressure” will ensue which will further drive down prices.
Another pointed out that once bitcoin drops below that price point, it would have lost all the value it had gained from the last five years, since its 2017 high.
Arthur Hayes, former BitMEX chief, took to Twitter to voice his concerns.
“If these levels break, $20k $BTC & $1k $ETH, we can expect massive sell pressure in the spot markets as dealers hedge themselves,” Mr Hayes wrote.
“We can also expect that there will be some otc dealers and that will be unable to hedge properly and might go belly up.
He continued in his Twitter thread: “As far as the charts go, you better get out your Lord Satoshi prayer book, and hope the lord shows kindness on the soul of the crypto markets.
“Bc [because] if these levels break, you might as well shut down your computer bc [because] your charts will be useless for a while.”
In the same vein, Charlie Morris, founder of digital asset management firm ByteTree, believes that $20,000 could be a support level for bitcoin to rally.
However, if it goes past $20,000, all bets are off.
It “might prove to be a support level,” he told CNBC.
“At $20k, bitcoin has made no money since the 2017 high,” he added.
The bitcoin and ether token have been suffering, as have the rest of the world’s cryptocurrency in the wake of economic turmoil and major crypto exchanges pausing transactions.
Around midday on Monday, UK-based Celsius pays interest on cryptocurrency deposits, loans them out and also sells its own token, CEL, but it ceased all activities around midday on Tuesday.
In a blogpost the company warned it was “pausing” all withdrawals and transfers between accounts, adding: “Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, swap, and transfers between accounts.
“We are taking this action today to put Celsius in a better position to honour, over time, its withdrawal obligations.”
They have currently still frozen all their customers’ accounts.
In response, cryptocurrency’s total market cap dipped drastically below US$1 trillion. At time of writing, it was resting at US$924 billion.
Cryptocurrency has been facing a reckoning in recent weeks – and particularly the last few days – as fears mount over a global recession amid rampant inflation and the US central bank hiking interest rates.
On Friday, data found the USA’s inflation rate had reached a new high — rising to 8.6 per cent in May, the worst its been since 1981.
Over the weekend, cryptocurrency plunged in reaction to the news.
This Wednesday, the US Federal Reserve is expected to raise its interest rate to combat spiking inflation.
Economists predict the rate will be increased to settle on 0.25 per cent or 1.50 per cent for July, with the central bank doing a similar thing last month.
Cryptocurrency is closely aligned with the traditional stock market and over the last few days, markets like Dow Jones have tanked and entered a bear run.