Saying that it hasn’t been a good weekend for crypto investors and holders is an understatement. We’ve gotten used to those big price swings in the past few months, but this weekend and continuing on Monday, Bitcoin hit a new low. Before that happened, the price was already under $30,000, but in the moment, a sharp drop sees Bitcoin in the $21,000. This is the first time in nearly 2 years for Bitcoin to drop that low, and experts are fearing that things could get worse before they get better, if ever.
Bitcoin has lost around 25% since last Friday and nearly 70% of its all-time high in November last year. It’s also dragging the market with it, resulting in huge drops for Ethereum and the near obliteration of smaller coins.
More Than $200 Billion Wiped Off the Market in a Few Days
Crypto lending company Celsius has paused withdrawals for its customers. It was an unprecedented move that sparked fears of contagion into the broader market. More than $200 billion were wiped off the market over the weekend, which is just a drop in the sea of much broader sell-offs. Due to this, the crypto market capitalization fell under $1 trillion for the first time in nearly a year and a half, so it’s safe to say that this is a problem that could take a lot of work to solve.
It’s not just the sell-offs that have caused Bitcoin’s plunge. They’re a symptom, not the disease itself. Macro factors are contributing to the bearish sentiment. Inflation in the USA is rampant no matter what the government says, while the Fed is expected to take interest rates up in order to fight the rising prices.
Meanwhile, the war in Ukraine continues as Russia seems defiant to level the country to the ground. There’s no end in sight to the fighting, and while it lasts, the world will suffer. It’s a hard and long winter ahead of us, and it seems that it already started for cryptocurrencies.
There is a bit of light at the end of the tunnel, no matter how faint it is. According to some analysts, if history aims to repeat itself, brighter times may arrive in the future. According to some experts, previous bear markets have seen Bitcoin fall down 80% from its record high. Currently, it’s about a 70% drop from the price high in November 2021 of $69,000, so a new dawn may be shining bright soon.
In the short term, experts believe that the drops will continue until Bitcoin’s price hits $20,000. That’s the next major psychological level after the market endured such a beating. Traders are rushing to ditch risky investments such as cryptocurrencies while analysts are telling everyone to calm down. The Fear & Greed index is at extreme fear, but Bitcoin has weathered the storm before.
Things might not seem great right now, but it may be the dawn of a new era that could take it to new highs. Just not as soon as we all hoped.