Bitcoin tumble leaves the average buyer in the red

The cryptocurrency industry’s “bloodbath” worsened on Wednesday as bitcoin reached fresh lows for the year that put the average buyer of the world’s most popular digital asset deeper in the red.

Bitcoin fell below $ 20,000 for the first time since July last year while ether, the token linked to the Ethereum blockchain, fell to almost $ 1,000.

The declines mean that Bitcoin has lost 70 percent of its value since last autumn’s peak and is now trading below a much-followed market value known as its “realized price” – the average that buyers pay for coins in circulation.

The declines have exacerbated the crisis that has gripped the digital asset markets in recent months as investors abandon high-risk assets and some of the largest players are struggling to fulfill their high-return promises.

This month, the total value of the largest cryptocurrencies fell below $ 1,000, from a peak of $ 3.2,000 in November. Investor confidence has eroded as Terra Network, a popular stack coin, collapsed and lending platform Celsius blocked its customers from withdrawing money. Some of the world’s largest stock exchanges, including Coinbase and Gemini, have cut thousands of employees to cope with the downturn.

‘It’s a bloodbath out there. Hunk down. Make sure you can last, Changpeng Zhao, CEO of Binance, the largest crypto exchange, said on Twitter earlier Wednesday.

Jay Hao, CEO of OKX, warned investors to be aware of leveraged positions in a volatile market. “Anything can happen. Things can always get worse. Adequate risk management is the best way to survive. Stay safe.”

Noelle Acheson, head of market insight at Genesis Trading, said that bitcoin this week fell below its “realized” price – currently around $ 23,038, according to Glassnode – for only the third time in the last five years. In the other two cases – in November 2018 and March 2020 – this signaled that bitcoin was “very close to the market floor”, she said.

The $ 20,000 level also represents a significant threshold for the cryptocurrency because it puts the price close to the peak levels achieved during the last major rise in crypto prices in 2017.

The withdrawal in crypto comes amid widespread sales in global financial markets as central banks begin to reduce the financial support that has put pressure on markets since the Covid-19 pandemic hit in 2020. The declines have been most painful for highly speculative assets.

“We are in the middle of a sale in global markets, which does not help. There is no appetite for risk anywhere, says Ilan Solot, partner at Tagus Capital, a crypto hedge fund.

He warned that falling below $ 20,000 for bitcoin and $ 1,000 for ether could create further shifts as traders are forced to sell assets to meet the demands for more security and margins on leveraged trades. Ether is considered a proxy for investors’ attitudes towards decentralized financial projects, which are often built using the ethereum blockchain.

– The influence in the system must be reduced dramatically. This can happen in an orderly or disorderly manner, Solot said.

On Monday, Celsius, one of the largest cryptocurrency lenders, blocked its customers from withdrawing funds citing “extreme market conditions”. The loan company, which had $ 12 billion in assets in mid-May and claims to have more than 1 million customers, had taken risky bets in the defi markets.