Bitcoin Suddenly Nukes, Sending The Price Of Ethereum, BNB, XRP, Solana, Cardano And Dogecoin Into Free Fall

Bitcoin, ethereum and other major cryptocurrencies have gone into free fall after seeing wild swings this week (and following a bleak price warning out of China).

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The bitcoin price has again dropped under the closely-watched $20,000 per bitcoin level after clawing its way back over the psychological barrier it crashed under earlier this month—that some feared could spell disaster.

Ethereum and other major cryptocurrencies BNB
BNB
, XRP
XRP
, solana, cardano and dogecoin have also crashed back, each losing between 5% and 10% over the last 24 hours as bad news for the crypto market piles up.

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“Most short-term technicals point to an above-average chance of a final ‘washout’-style decline before this bottoms,” Mark Newton, technical strategist at Fundstrat, wrote in a note seen by Bloomberg and warning the bitcoin price could fall to as low as $12,500 and $13,000 in the short term.

In recent weeks, bitcoin miners who secure the network in exchange for freshly minted coins have been forced to offload their bitcoin to keep the lights on, analysis by Arcane Research found, putting downward pressure on the bitcoin price amid an energy cost spike.

“Bitcoin mining has become the most deciding factor for the crypto market overall,” Martin Hiesboeck, head of blockchain and crypto research at trading platform Uphold.

“Mining companies’ profitability is a factor of equipment (bought on credit, hence repayment obligations), running cost (electricity) and revenue (the bitcoin price). Until April 2022, miners held on to their mined bitcoin each month in expectation of rising prices. It now emerged that starting back in April, they began selling their entire monthly production of bitcoin (and even parts of their overall holdings) in anticipation of rising energy costs; they still need to pay for electricity. This depresses the price of bitcoin and hence the entire market.”

The bitcoin and crypto price crash that’s wiped around $2 trillion from the combined crypto market since late last year has caused chaos for the crypto industry, leaving many fledging companies fighting for survival.

Analysts at Wall Street giant Goldman Sachs have downgraded crypto exchange Coinbase to “sell”—warning the company could be on track for “further degradation” even after a devastating 80% price crash.

Crypto lenders such as Celsius have been forced to freeze withdrawals while others, including BlockFi, have had to seek emergency funding. Sam Bankman-Fried, the billionaire chief executive of crypto exchange FTX, has told Forbes some smaller crypto exchanges will soon fail.

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MORE FROM FORBES‘Heading To Zero’-China Issues Shock Bitcoin Price Warning Amid Huge $2 Trillion Crypto Crash

“Recent incidents, such as the Celsius transaction freeze, illustrate that crypto lending remains a regulatory gray area,” Ben Weiss, the chief executive of bitcoin ATM operator CoinFlip, said via email.

The broad crypto crash was sparked by the Federal Reserve’s decision to hike interest rates and cut stimulus measures in an attempt to drive down inflation in November last year.

“Markets will continue to keep a close eye on inflation data and the ensuing reactions from central bankers,” Thomas Hall, an analyst at asset manager Trovio, wrote in an emailed note.

However, some in the bitcoin and crypto space are confident the bitcoin price has almost bottomed and are predicting the bitcoin price will rebound in the coming months as the Fed eases its tightening measures.

“The sell-off seen in bitcoin over recent weeks has all the hallmarks of capitulation by weak holders, triggered by the negative news stories around first LunaLUNA then Celsius,” Gavin Smith, the chief executive of crypto company Panxora, said in emailed comments.

“We anticipate that sell-off marking the low for this year and expect bitcoin to make good gains for the rest of the year as Fed tightening fears start to ease reflecting concerns about the underlying economy.”

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