- Bitcoin Lost $20,000 Support Level
- This led to mass liquidations and panic
- Understanding what’s going on
The price of Bitcoin plummets, losing an important support level of $20,000. This led to massive liquidations of $300 million.
At the time of writing, BTC is trading at $19,858, down 10% over the week. Ether fell 7.17% to $1426, losing 9.25% in a week What are the reasons for the recent decline? Let’s try to figure it out.
Repression against the crypto market
The US is not giving the crypto industry a break with new persecutions. Today, New York State Attorney General Letitia James filed a lawsuit against the Kucoin crypto exchange. It argued that ether and some other crypto assets are securities and should be registered as such.
The industry was also hit hard by the Silvergate bankruptcy and the exit of the Blockchain exchange from the British market.
General decline in the stock market
US stock indexes also fell on Thursday. The Dow Jones Industrial Average was down 1.66%, the S&P 500 was down 1.85% and the Nasdaq Composite was down 2.05%. This was influenced by data on the NFP labor market – they turned out to be much higher than expected (225 thousand). That is, there are still more vacancies than unemployed. These numbers supported the Fed’s view that inflation remains a problem for the economy.
Powell said this week that higher-than-expected interest rates may be needed to curb inflation. Therefore, analysts increased the probability of a rate hike by 50 bp (rather than 25 bp). Now this risk is 60%.