As Bitcoin reaches its lowest point, the crypto market seems to be heading for further losses. The number one crypto by market cap approaches a major support level, and if bulls failed to protect it, BTC’s price could return to its 2020 range.
By The Numbers: Bitcoin Suffers Largest Single Day Drop Since March 2020| By The Numbers: Bitcoin Suffers Largest Single Day Drop Since March 2020
Bitcoin (BTC), which trades at $21,800, has experienced a loss of 5% and 29% in the past 24-hours and seven days, respectively. BTC’s price began to trend lower as a result of a series of bad news around major crypto companies, and the U.S. Federal Reserve (FED) shift to its monetary policy.
As market participants prepare for more losses, the sentiment is general in crypto. AccordingArthur Hayes is the co-founder of crypto exchange BitMEX. He explains that investors hedge against price volatility by purchasing put (sell), options contracts.
Here we go …
1/
For more information, see onchain data $wBTCAnd $ETHThe majority of liquidations took place. Data visualization @parsec_finance
— Arthur Hayes (@CryptoHayes) June 14, 2022
Hayes asserts that Deribit options platforms record high Open Interest (OI), total options contracts for Bitcoin at $20,000, and Ethereum at $1,000. In addition, Hayes believes other “massive” investment vehicles could be “centered around those strikes”, around those specific price levels.
According to this view, $20,000 is a crucial support level for Bitcoin. This price point corresponds to the 2017 bull-run peak at which Bitcoin’s price climbed above $3,000, and then into discovery mode.
When an asset trend downwards, previous all-time highs are often key points. Many people might have purchased the 2020 rally above $20,000 and may not be willing to sell below that price. Hayes stated the following:
The charts are not good news. You might want to get your Lord Satoshi Prayer Book out, and ask for mercy on the cryptocurrency markets. You might want to shut down your computer if you see these levels breaking. Your charts could be lost for quite some time.
Bitcoin could be a Black Hole
Hayes warns that if Bitcoin and Ethereum fail to maintain these levels, it could spell doom for crypto markets. Even though BTC and ETH remain in crucial support, it seems that the crypto market will be vulnerable to further losses as the FED raises interest rates. Hayes said:
We can expect huge sell pressure on spot markets if these levels are broken, at 20k BTC, and 1kETH. This is because dealers hedge. There will likely be some over-the counter (OTC) dealers who will be unable or unwilling to hedge correctly and may go bust.
Related Reading| Has Bitcoin Hit Bottom Yet? Here’s What On-Chain Data Says
At the moment, both the traditional and crypto markets will see some relief when indicators fall to oversold levels.
$SPXThe breakdown finally reached its first major support since then.
Although I still believe that it will eventually head towards low covid levels, support is always given.
Give me a bounce pic.twitter.com/A1DbeAIPVD
— DonAlt (@CryptoDonAlt) June 14, 2022