As bearish sentiment swept the financial markets, experts are weighing whether the Bitcoin price will drop below $20,000 and what might happen if it does.
Some experts believe Bitcoin will drop further
Bitcoin is currently trading at just over $22,000, with the ATH price dropping massively from $69,000. All eyes are on $20,000 support at the moment. This level is also the peak of Bitcoin’s last bull run in 2017. In previous bear markets, Bitcoin never fell below the price marked by the top of the bull run. But the difference this time around is that Bitcoin has much less distance to travel to get past this mark.
Sam Callahan says 80% drop is possible for Bitcoin
Swan Bitcoin analyst “ Based on experience from previous bear markets, “Sam Callahan” thinks that Bitcoin could drop more than 80% from the ATH level, as it did when it dropped to just over $3,000 in December 2018. This means that Bitcoin has dropped as low as $13,800 this cycle. But Callahan isn’t that worried if he is. The analyst says:
It is important to note that Bitcoin’s investor base is very different and more complex compared to previous bear markets. If Bitcoin drops below $20,000, I think we will see significant buying pressure at these discounted price levels as Bitcoin’s long-term value proposition remains intact.
Yuya Hasegawa, a crypto market analyst for Japanese crypto exchange Bitbank, shares this sentiment. Last month, Hasegawa said that Bitcoin could drop as low as $12,200 during this bear market. But now, his perspective is more optimistic. According to Hasegawa:
I think Bitcoin can drop below $20,000 temporarily. However, it will likely recover the level around it quickly.
But not everyone is so optimistic for Bitcoin
Global Block analyst “Marcus Sotiriou“ believes $20,000 will bring more drops. Sotiriou pointed to the controversy surrounding crypto lending firm Celsius, the possibility of the company going bankrupt, and the blatant liquidity crisis that forced it to pause all user withdrawals earlier this week. In his current analysis, Sotiriou lost:
Celsius is in big trouble. If the whales investing in Bitcoin and Ethereum are liquidated, this will cause more negativity. I think many fear a liquidation cascade as Celsius is called margin and currently has a liquidation price of around $17,000 in BTC positions.
occurs when they have to unexpectedly and unintentionally close accounts in Bitcoin derivatives products (such as futures and options) after reaching insufficient collateral to hold those positions. This type of forced selling puts additional downward pressure on the Bitcoin price. This then threatens the price with further declines. It also causes more liquidation.
Arthur Hayes expects these levels in BTC and ETH
Arthur Hayes, former CEO of BitMEX, also highlighted the potential of such risk on Twitter yesterday. Pointing to the crypto derivatives market, Hayes noted that most open positions (the number of futures and options contracts yet to be settled) are currently $20,000 for Bitcoin and $1,000 for Ethereum.
Here we go …
1/
Looking at onchain data for $wBTC and $ETH, the liquidations have mostly happened. Data visualization from @parsec_finance
— Arthur Hayes (@CryptoHayes) June 14, 2022
Hayes said that as the market approaches these levels, investors with short positions will be able to protect their positions. announced that they will need to sell their crypto on the spot market. If these levels break, BitMEX’s former CEO says, “we can expect massive selling pressure” in the market. If the situation gets worse, Hayes told crypto investors “you can turn off your computer because the charts are useless for a while.”
