Bitcoin and other cryptocurrencies have plummeted as investors dump risky assets. Crypto lending firm Celsius is suspending withdrawals for its clients, raising fears of a spread to the wider market.
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bitcoin fell briefly below $20,000 on Wednesday as a number of factors, from macro concerns to problems with crypto companies, continue to put pressure on the market.
The world’s largest cryptocurrency last traded down 1.3% to $20,008.36, according to data from CoinMetrics. Earlier Wednesday, Bitcoin fell to $19,841.
Other digital coins including ether were also lower.
Bitcoin has been trading in a tight range for the past two weeks, unable to make a major move above $22,000.
“The story, which could well play out before the end of the year and beyond, is leading Bitcoin down today, one of a looming recession and rising inflation,” analysts at cryptocurrency exchange Bitfinex said in a note on Wednesday.
Inflation continues to be high, while central banks also seek further rate hikes. raises fears of a recession in the USA and other countries.
On Tuesday, US stock markets fell and futures remained under pressure on Wednesday. Bitcoin is closely associated with movements in the US stock markets and tends to follow them lower or higher.
Vijay Aiyar, vice president of corporate and international development at crypto exchange Luno, told CNBC that bitcoin is likely to trade between $17,000 and $22,000 “for a while, given current market sentiment” and another expected rate hike in USA. The Federal Reserve in July, which continues to “weight down all risky assets.”
“Most of the bounces over the past few weeks have been sold, usually classified as bear market bounces, with the goal of catching late buyers only for them to sell positions lower,” Aiyar said.
Sam Bankman-Fried, CEO of FTX cryptocurrency exchange intervened to rescue struggling businesses including BlockFi and Voyager Digital offering lines of credit.
“The market is taking a breather after the fall. There are still systemic issues as people prop up various dominoes so as not to cause a hitting effect,” Charles Hayter, CEO of website CryptoCompare, told CNBC via email.