The massive fall in prices is attributed by many analysts to deteriorating macroeconomic conditions, such as rising inflation and interest rates. This instills a lot of fear among investors, which makes them act risk averse.
Right now, every crypto investor has their eyes on the $20,000 level. Not only because it is an important psychological support level, but also because it represents the peak of the bull run in 2017. In other bear markets, the Bitcoin price has never fallen below this level. This time, however, everything could be different.
What if the Bitcoin price drops below $20,000?
More and more crypto analysts are saying that it is quite possible that the Bitcoin price will fall below $20,000 this time. Analyst Sam Callahan says it is quite possible that the BTC price will fall more than 80 percent from its all-time high. We saw exactly the same thing happen in December 2018. When the price fell to about a low of $3,000. If such an 80% price crash happens this time, it would mean that the Bitcoin price drops to $13,800 this cycle.
Bitcoin is back on top
Such a price drop is a terrible prospect for many investors, but Callahan says he won’t be worried if it does. According to him, Bitcoin will certainly not disappear from the scene and come back on top.
“It is important to note that Bitcoin’s investor base is very different and more sophisticated compared to previous bear markets. If Bitcoin were to fall below USD 20,000, I think we would see substantial buying pressure at discounted price levels. This is because Bitcoin’s long-term value proposition remains intact.”
– Sam Callahan
Analyst Yuya Hasegawa of Bitbank shares the same view. She says that the price could drop below $20,000 for a while, but she believes the currency would recover quickly.
Not everyone is so optimistic
Still, not every analyst is as optimistic as Yuya Hasegawa. Analyst Marcus Sotiriou says that many crypto companies can get into serious trouble if the Bitcoin price drops below $20,000. For example, look at Celsius and Terra. If more and more companies get into financial trouble, it can damage the entire crypto market. A price crash to $17,000 is definitely in the books when forced liquidations take place, Sotiriou said.
Also Arthur Hayes, the CEO of BitMEX, emphasized on Twitter yesterday that the crypto market could lose much more value. This is because there are still a lot of crypto futures and option contracts to be settled. The closer Bitcoin approaches $20,000 and Ethereum approaches $1,000, the more traders with open positions will have to sell their crypto on the spot market to hedge their positions.
And if those levels break, we can expect huge selling pressure in the market, Hayes said. How bad could the crash get? According to Hayes, it is better to turn off your computer.
