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The bitcoin price has this week crashed towards $20,000 per bitcoin, a psychological barrier that bitcoin first topped in late 2017 before entering a three-year bear market. Ethereum and other major cryptocurrencies, including top ten coins BNB
This week, Arthur Hayes, the influential co-founder of the bitcoin and crypto exchange BitMEX, warned of “massive selling pressure” if the bitcoin price breaks below $20,000—telling traders they “might as well shut down [their] computer.”
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In a Twitter thread, Hayes, who in May was sentenced to six months of home detention as part of a two-year probationary period after he pled guilty to violating the US Bank Secrecy Act, pointed to data that showed bitcoin forming a base at $20,000 and ethereum $1,000. “If these levels break, you might as well shut down your computer because your charts will be useless for a while,” Hayes said.
“We can expect massive sell pressure in the spot markets as dealers hedge themselves,” added Hayes, warning that severe losses could cause some trading desks to “go belly up.”
Bitcoin, ethereum and other cryptocurrencies have suffered an almighty crash over the last week as higher-than-expected inflation data pushed the Federal Reserve towards a more hawkish program of interest rate rises than previously anticipated in an attempt to arrest soaring prices.
On Wednesday, the Fed hiked interest rates by 75 basis points, its highest single increase since the 1990s. Global stock markets have also come under increased pressure this week, with major U.S. indices entering bear markets.
“The Fed has ditched its previous guidance and opted for a full-throated 0.75% interest rate rise,” Laith Khalaf, head of investment analysis at broker AJ Bell, wrote in emailed comments. “The S&P 500 is now in bear market territory, so it’s evident that investors are beginning to think the unthinkable, that monetary policy might actually stand a chance of reaching levels last seen prior to the financial crisis.”
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“Global markets took a catastrophic hit,” Marcus Sotiriou, an analyst at the U.K.-based digital asset broker GlobalBlock, wrote in an emailed note. “Ever since the crypto rally in November, crypto has been on a ruthless downtrend with little sign of relief.”
The huge bitcoin and crypto crash this past week has been exacerbated by liquidity problems at major crypto lender Celsius. Celsius, which pays out interest on bitcoin, ethereum and other cryptocurrencies users store on the platform, this week blocked customers from withdrawing funds, citing “extreme market conditions.”
“The market remains justifiably fearful of the potential impacts of Celsius becoming insolvent, whilst still having billions of assets under management,” Sotiriou added.