Bitcoin drops below $20,000 for the first time since 2020

• Digital assets are still under threat as a result of the current Defi crisis
• Bitcoin has plummeted for the past 12 days as investor fear grows.

Bitcoin fell below $20,000 for the first price since December 2020, as evidence of growing stress in the cryptocurrency industry mounts against a backdrop of monetary tightening.

Bitcoin dropped as much as 6% to $19,377.08 at 11:54 a.m. Pakistan time on Saturday. The largest token in terms of market capitalization has declined for 12 days in a row. Ether nearly touched $1,000 before falling to $999.86, the lowest since January 2021, before reversing losses.

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“Surging recession fears are crippling appetite for risky assets and that has crypto traders remaining cautious about buying Bitcoin at these lows,” said Edward Moya

On June 15, the Federal Reserve hiked its key interest rate by three-quarters of a percentage point, the largest increase since 1994, and central bankers signaled that they will continue to hike aggressively this year to battle inflation. A higher-rate environment has been damaging to riskier assets such as cryptocurrency, contributing to a roughly 70% drop in Bitcoin from its all-time high in November.

After the collapse of the Terra blockchain last month and the recent move by crypto lender Celsius Network Ltd. to restrict withdrawals, a market that began falling late last year on predictions of a less flexible Fed is now showing symptoms of wider instability. To add to the gloom, the crypto hedge fund Three Arrows Capital reported significant losses and stated that it was exploring asset sales or a bailout. According to analyst Glassnode, even long-term holders who have avoided selling till now are feeling the pressure.

David Puell On-chain research for @ARKInvest

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“The #Bitcoin Puell Multiplehas fallen to the lowest levels since the Nov 2018 bear market crash Miners are currently earning just 39% of their 1yr average USD income. The Difficulty Ribbon is also compressed, signalling miner stress and potential capitulation on the horizon” Glassnode told on Twitter handle