Bitcoin’s second quarter was a bloody one. Bitcoin’s Q2 price dropped by 56%, dropping from $45,000 down to $19,000. This was the worst quarter since Q3 2011. Bitcoin has now reached its $20k mark, which is a crucial zone.
Bitcoin’s Historic Fall
Bitcoin had a 37% decline during June. It isn’t just these numbers that are gloomy.
June was also the month of the unsurprising rejection of Bitwise and Grayscale’s spot-based bitcoin ETF applications –immediately followed by Grayscale’s promised lawsuit–.
Moreover, the effects of the Terraform Lab’s UST stablecoin and Three Arrows Capital collapses seem to have turned into something contagious amongst crypto firms: another crypto lender and trading platform, Vauld, suspended all withdrawals, trading, and deposits quoting the “financial challenges” of current market conditions.
During 2022’s second quarter, Bitcoin opened at $45,000 and declined to below $20,000, managing to recover its key $20k price level just in time to close June above it. As NewsBTC reported recently, the coin “needs to break above $20,500 and continue above $22,000 to clear out any potential short-term downside risk.”
Overall, the latest Arcane Research weekly report notes that this decline “marked a historic quarter for the bitcoin price, and we have to go back 11 years to find a more brutal quarter. Bitcoin ended the quarter just below $20,000, dropping 56%.”
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What You Can Expect
However, there could be more good times ahead for the BTC market.
As Arcane Research shared, Bitcoin’s $20k level marks the peak of its last bull run, adding that “Technically speaking, the close of the monthly candle was positive”, with June’s closing price being above the 2017 peak. The report also points to a possible support/resistance flip “where previous resistance will act as support.”
But macroeconomic factors might be the ones that can turn positive hopes around. There is still increasing global uncertainty. S&P 500 is down by 20% from its January high, which also reflects on Bitcoin. Christian Sewing, chief executive of Deutsche Bank AG believes there’s a 50% chance for a global recession. Other large banks also see this coming. A decline of this magnitude could continue for many quarters.
Bloomberg reported about the current effects of inflation rates and noted that “The gauge for the US is already 12.2%, similar to levels witnessed at the start of the pandemic and in the wake of the 2008 financial crisis.”
Anna Wong, the chief US economist at Bloomberg Economics, wrote that “The risk of a self-fulfilling recession—and one that can happen as soon as early next year—is higher than before. Even though household and business balance sheets are strong, worries about the future could cause consumers to pull back, which in turn would lead businesses to hire and invest less.”
A self-fulfilled, feared recession may also be a concern for crypto markets. High-risk assets are expected to suffer investors’ retraction during economic declines, which can lead to panic selling and more gloomy prices.
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