Experts weigh in on whether Bitcoin price will plunge below $20,000 and what might happen if it does

As bearish sentiment pervades financial markets, experts weigh whether the Bitcoin price will drop below the $20,000 mark and what might happen if it does.

What happens if the Bitcoin price falls below $20,000?

Currently firmly in the bear market, Bitcoin is trading at just above $22,000, a significant drop from its all-time high of nearly $69,000 — and a drop that most crypto-assets have seen. Observers attribute this to worsening macroeconomic conditions, such as rising inflation and interest rates.

Right now, all eyes are on the $20,000 price line — not only because it is a significant psychological resistance level but also because it represented the top of Bitcoin’s last bull run in 2017.

During previous bear markets, Bitcoin has never dropped below the price level marked by the top of the previous bull run. However, this time, Bitcoin has a lot less travel distance to cross that mark.

Swan Bitcoin analyst Sam Callahan believes that, based on experience from previous bear markets, there is a chance that Bitcoin could drop more than 80% from its all-time high, as happened in December 2018 when it dropped to just above $3,000. That means Bitcoin will drop to as low as $13,800 this cycle.

Arthur Hayes, the former CEO of BitMEX, likewise highlighted the potential for this kind of risk in a Twitter thread yesterday. Pointing to the crypto derivatives market, Hayes noted that most open interest—the number of futures and options contracts yet to be settled—is currently at $20,000 for Bitcoin and $1,000 for Ethereum.

The closer the market approaches these levels, the more traders with open positions will need to sell their crypto in the spot market to hedge their positions, Hayes explained. And if those levels break, “we can expect massive sell pressure” in the market, said Hayes.

How bad would that get? If it happens, Hayes said to crypto traders, “you might as well shut down your computer [because] your charts will be useless for a while.”

Read more:

Join us on Telegram

Follow us on Twitter

Follow us on Facebook

You might also like