Bitcoin drops below $20,000 in cryptocurrency turbulence

• The price of bitcoin has dropped below $20,000 (£16,400)
• For the first time since December 2020.
• Bitcoin has already lost more than 70% of its value since its all-time high last year.

The price of bitcoin has dropped below $20,000 (£16,400) as the cryptocurrency market continues to deteriorate.

According to CoinDesk, the key digital asset fell to levels not seen since December 2020 on Saturday morning, briefly falling below $19,000 before recovering to around $19,160.

Bitcoin has already dropped more than 70% of its value since its all-time high last year.

Several reasons have weighed down Bitcoin and other cryptocurrencies, including rising inflation, which has forced central banks to raise interest rates. This, in turn, has lowered investor interest in risky assets such as cryptocurrency and has impacted global stock markets, particularly the previously high-flying tech sector.

Read More: Peter Schiff & Michael Saylor agree Bitcoin is on sale

The UK and US central banks boosted interest rates this week in a bid to cool soaring prices, placing additional pressure on digital assets.

Cryptocurrency refers to a class of digital assets that share the same fundamental structure as bitcoin: a publicly accessible “blockchain” that records ownership without the intervention of a central authority.

Crypto supporters argue that the industry is a good investment since, for example, it has cheap costs and, unlike traditional currencies, is not beholden to governments. However, its sceptics argue that the lack of governmental control or implied government endorsement, as a result of crypto and bitcoin’s independent roots, makes it vulnerable to scams and dramatic price volatility.

The cryptocurrency market, which operates 24 hours a day, is also experiencing internal issues, which began with the collapse of Terra, a so-called stablecoin whose value was intended to be fixed to the dollar. Its failure in May damaged investor confidence in digital assets, sparking a wave of selling that has been exacerbated by broader interest rate movements. According to research firm CoinGecko, the total crypto market is now worth $884 billion, up from more than $3 trillion in November of last year.

“There are a lot of funds, large borrowers of bitcoin, who have liquidation positions in the $20,000 range,” said Bobby Lee, chief executive of the crypto storage company Ballet Global.

Read More: Bitcoin falls below $18,000, Ethereum falls below $900 as sell pressure