Once more, Bitcoin temporarily falls below $20,000 as the pressure on the cryptocurrency market grows.
On Wednesday, Bitcoin temporarily dipped below the $20,000 level as the market was still being affected by a number of factors, such as macroeconomic concerns and problems with cryptocurrency firms.
According to data from CoinMetrics, the largest cryptocurrency in the world was last trading up less than 1% at $20,359.25. The price of bitcoin earlier on Wednesday hit $19,841.
Ether and other virtual currencies also experienced declines.
In the past two weeks, Bitcoin has been trading in a narrow range, failing to move significantly above $22,00
"A narrative of looming recession and mushrooming levels of inflation is guiding bitcoin lower today," analysts at cryptocurrency exchange Bitfinex wrote in a note on Wednesday. "This narrative could well play out for the rest of the year and beyond
A recession in the United States and abroad is being feared as long as inflation continues to be high and central banks try to raise interest rates further.
U.S. stock markets declined on Tuesday, and Wednesday's futures prices were under pressure. The price of bitcoin has been inversely connected with changes in the U.S. stock market and tends to rise or fall along with them.
Given the current market sentiment and another anticipated interest rate increase from the U.S. Federal Reserve in July, which continues to "weigh down all risk assets," Vijay Ayyar, vice president of corporate development and international at cryptocurrency exchange Luno, told CNBC that bitcoin is probably going to trade between $17,000 and $22,000 "for a while."
According to Ayyar, "most bounces are being sold off for the past several weeks and are often classed as bear market bounces, with the intention of trapping late investors and forcing them to liquidate positions lower.
Bitcoin liquidity problems
Major liquidity concerns have been revealed at businesses across the industry as a result of the recent price collapse, which has destroyed billions of dollars of value from the bitcoin market.
Withdrawals from users were stopped this month by cryptocurrency lender Celsius due to "extreme market conditions." CoinFlex, a cryptocurrency exchange, also stopped customer withdrawals after one customer failed to pay back a debt owed to the business.
Withdrawals from users were stopped this month by cryptocurrency lender Celsius due to "extreme market conditions." CoinFlex, a cryptocurrency exchange, also stopped customer withdrawals after one customer failed to pay back a debt owed to the business.
In the meantime, Three Arrows Capital, a well-known cryptocurrency hedge fund, missed its payment on a more than $670 million loan from Voyager Digital.
Sam Bankman-Fried, the CEO of cryptocurrency exchange FTX, has intervened to provide credit lines to failing companies including BlockFi and Voyager Digital.
"After the declines, the market is currently taking a break. Systemic problems persist as people try to prevent various dominoes from triggering cascading repercussions "According to an email to CNBC from CryptoCompare CEO Charles Hayter.
Source: CNBC News