Bitcoin’s Lows
Bitcoin, the world’s largest crypto asset, fell to an all-time low of $22,818 at the start of the week. The new price meant that BTC had dropped 17.34% in less than a day, losing over $5,000 in value.
One of the reasons for the asset’s new lows has been linked to Celsius’s suspension of all withdrawals, transfers, and swaps between accounts. The news, combined with the shock of US inflation data released on Friday, had a negative impact on cryptocurrency. On a broader scale, Terra’s implosion in the middle of May made investors become more wary.
“The fundamentals to support stabilization and recovery just aren’t there,” said Valkyrie Investments co-founder Steven McClurg. “Things can and likely will get worse before they get better.”
“If you do get long, perhaps think about doing so with either a long call spread or short put spread to limit risk,” Rick Bensignor of Bensignor Investment Strategies advised. “If this dives,” he warned, “there’s no reliable support nearby.”
Altcoins fared no better in the space, as their values also plummeted as the carnage spread. Ethereum dropped 17.69% to $1,256, while BNB, ADA, and SOL fell 13.11%, 10.57%, and 15.64%, respectively. Dogecoin, Polkadot, Wrapped Bitcoin, and Polygon all suffered double-digit losses.
Companies with Bitcoin on their balance sheets were also hit hard. MicroStrategy, which holds over 120,000 BTC, saw its shares fall by 28%, while mining companies like Marathon Digital Holdings Inc and Riot Blockchain Inc fell by 19% and 16%, respectively.
The dipping dip
It is natural for investors to buy the dip when prices are falling, but analysts warn against doing so. Financial commentator Peter Schiff warned his over 700,000 followers not to buy the dip.
“This could be a rough weekend for crypto. Bitcoin looks poised to crash to $20K and Ethereum to $1K. If so, the entire market cap of nearly 20K digital tokens would sink below 800 billion, from nearly $3 trillion at its peak. Do not buy this dip. You’ll lose a lot more money,” Schiff predicted.
Regular dip buyers such as MicroStrategy and even El Salvador have refrained from adding to their balance while scanning the horizon for a signal. He predicted that job losses in Web 3 and rising energy costs would force crypto hodlers to liquidate their crypto assets in order to pay their bills.
Guggenheim’s Scott Minerd predicted at the World Economic Forum in Davos that the cryptocurrency winter would last long, with Bitcoin’s price plunging to $8,000. BlockFi, Coinbase, and Gemini have all announced that they will be reducing their workforces in response to the current market conditions in the cryptocurrency industry.