Bitcoin, the world's first and largest cryptocurrency, sank below $20,000 on Saturday as investors continued to shy away from riskier assets in the midst of rising interest rates.
The digital asset was trading at $19,437.48 as of 2.30pm UAE time, down more than 7 per cent in the past 24 hours and about a third for the past seven days, according to CoinMarketCap. That is the lowest level since December 2020.
Ethereum, the second-largest cryptocurrency, was down by almost the same margins to $1,006.58.
“The crypto king continues to remain out of favour among investors and traders … speculators believe that floor has come out of the BTC price, and it is likely that the price may continue to move lower, and we are likely to see bigger bids coming near the 15K price level now,” Naeem Aslam, chief market analyst at Dublin-based Avatrade, wrote in a note.
The cryptocurrency market, known for its highly-volatile nature, is faced with another downwards cycle in the face of rising inflation and interest rates, as well as a stream of reports on widespread theft in the cryptocurrency sector.
Bitcoin, the face of the market, is now down almost 60 per cent year-to-date, 45 per cent in the past 12 months and more than 70 per cent from its peak of almost $68,000 it hit in November last year.
It has witnessed a steady drop, falling off more thresholds as its price sank deeper. It dropped below $30,000 on May 10, the first time it dropped beyond that key level since July 2021.
The sell-off was made even worse when two of the biggest exchange platforms, Celsius Network and Binance, curtailed trading activity this week, adding to the fear, uncertainty and doubt.
US-based Celsius froze withdrawals and transfers, blaming “extreme” market conditions, while Binance, the world's largest exchange in terms of volume, halted Bitcoin withdrawals on June 13 for a few hours because of what its chief executive called a “stuck transaction”.
The next day, Bitcoin plunged 10 per cent to hit the $20,000 mark — and with that the cryptocurrencies' market capitalisation fell below $1 trillion. As of Saturday, it stood at more than $850 billion, CoinMarketCap data showed.
The market was also rattled by the spectacular collapse of the Luna cryptocurrency and its associated Terra stablecoin. Luna, once at $116 in April, fell to less than 1 cent, while Terra — which, as a stablecoin, was meant to have a value of $1 at all times — was depegged and May 9, causing it to crash to 7 cents.
Bitcoin did mount a rally on May 31 when it traded above $30,000 and recorded its biggest rise in two weeks at the time, but the resurgence was short-lived.
The cryptocurrency industry has been criticised for its mining activities — the process of obtaining these digital assets — which are harmful to the environment, but its leaders claim they have increasingly used renewable energy sources.