News hardware A Bitcoin below $20,000, X reasons to fear the worst
As you surely know, the value of Bitcoin has been divided by 3 since its highest level in November 2021. From €64,000 to €20,000, Bitcoin took the rest of the cryptocurrency market in its decline. An impressive fall that is likely to continue…
Bitcoin and the global economic context
Since the stock market crash of March 2020 due to the announcement of the first containment of the COVID pandemic, Bitcoin has subsequently experienced a strong uptrend.
For example: the NASDAQ, a stock market comprising several major technology stocks, also found itself catapulted to an all-time high, like most other listed stocks.
This context of global growth, supported by abnormal money printing, has greatly served the development and speculation around the cryptocurrency market. Thus, when the economic context is good, Bitcoin sees its price develop and vice versa when the context is bad.
Several reasons are related to the decline, but none is the main cause, it is the combination of a multitude of factors that makes this one in the grip of a downtrend.
Bitcoin correlated to stocks
Bitcoin has operated cyclically since its creation, linking bull run phases and bear market bear phases.
- 2010 – 2011: $0.05 to $30
- 2011 – 2013: return to $2 up to $1250
- 2013 – 2017: back to $165 up to $20,000
- 2017 – 2021: return to $3,500 up to $68,000
- 2021: back to $20,000 or less?
Although it is decentralized, Bitcoin remains highly correlated to traditional markets to trigger its famous cycles.
And you surely know that the current economic context is not at its best…
Between rising inflation, rising key rates and possible recession, financial players no longer know where to turn and are trying somehow to save the day.
Thus, for the past few months, we have observed a massive outflow of money from cryptocurrencies, but not only…
Large companies listed on the stock exchange are also subject to a substantial loss in value. Compared to Bitcoin, Netflix’s stock has also seen its price divide by 4.
But investors aren’t the only ones losing out…
Miners unplug graphics cards and stop mining Bitcoin
You know that to undermine and ensure the operation of the Bitcoin network requires computing power found in graphics cards and processors.
The “mining hashrate”, the indicator used to measure the total amount of computing power needed for the Bitcoin network is falling…
Another aggravating factor since this indicator suggests that miners disconnect their machines from the network. This demonstrates that mining Bitcoin, and even Ethereum, is no longer as profitable as before. As a result, the network is much less efficient and less attractive for miners, but also for Bitcoin investors…
Struggling crypto businesses
The sector’s platforms are also showing a certain feverishness in the face of falling prices.
In this downward context, many of them laid off massively, like Coinbase or Crypto.com.
In addition to these layoffs, some crypto companies are struggling to honor payments from their users. For example, lending platform Celsius paused withdrawals on its platform due to lack of liquidity.
“Our website is being updated. Due to the previously stated pause on withdrawals, swaps and transfers between accounts, some of our products and services are temporarily unavailable.” explains Celsius on its site.
Users are therefore trapped and some cannot withdraw their money…
A somewhat reassuring signal for cryptocurrency investors encouraging withdrawals on other platforms out of excessive precaution.
What next for Bitcoin?
Currently defending the key zone of $20,000, the former top from 2017, Bitcoin could see its price drop far below according to some experts.
Many believe that the multitude of factors mentioned above can trigger yet another panic movement and thus cause the price of Bitcoin to fall around $5,000, the price reached during the Covid crash.
However, nothing is certain and these analyzes are only guesses on this rather singular market.