Bitcoin drops to new lows for 2022 – Can it recover above 20k by the end of the year?
New Delhi : The crypto market has been under pressure throughout the year and despite a period of calm that started in June, the past couple of days have seen impulsive selling resuming. Bitcoin has not been spared by the new wave of liquidations and broke to a new low, managing to find temporary support around $15,500.
Long-term investors are the ones being hit the most, and with no bullish change in the price action structure, the question remaining is whether there is still more pain ahead. The conflict between two of the largest exchanges in the industry rattled the market, once again diminishing confidence on whether these platforms can protect customer funds.
One of the largest exchanges goes bust
A spat between Binance and FTX was the initial catalyst behind the selloff, but as of a few days ago (at the time of writing), FTX encountered liquidity issues and eventually was forced to file for bankruptcy. According to its CEO, the company needs no less than $8 billion in funding to meet withdrawal requests right now.
Although there were some rumors that Binance is about to buy FTX, that has been put off the table. Traders and investors are scrambling to reduce their crypto exposure, and selling tokens at fire sale prices is creating the risk-off environment still in play.
This leads to a loss of confidence, considering other exchanges might face similar issues. Analysts at easymarkets.com are skeptical that a sharp rebound can occur anytime soon since sentiment took a drastic hit.
BTC price tanks
Unfortunately for Bitcoin buyers, $20,000 failed to act as a support level. The price dropped 27% in 4 consecutive days, suggesting there is extremely slight interest in buying this token right now. Selling intensified after Binance abandoned the FTX deal and Bitcoin broke below the prior low established on June 18th.
Since the exchange has operations in the US as well, there are already talks that regulators might start investigating why customers can’t withdraw funds. All of these events lead to a vicious cycle with crypto valuations overall slashed by compulsive selling.
Following two years during which Bitcoin managed to post impressive results, 2022 saw most of those gains whipped out. There are still two months until the year ends, meaning sellers have enough time to make additional damage.
Both fundamentals and technicals are pointing at persistent selling pressure in the near term. Looking at the Bitcoin price chart, one can see that the break below the June low acts as confirmation that the bear market is still intact.
The probability for a rebound back towards $20,000 has pretty much diminished as a result, and now it’s increasingly likely that Bitcoin will continue to weaken. $15,000 and $13,000 are support areas where buyers might balance the order flow, but a move higher is considered by many a miracle.
Only if BTC manages to break above $21,500, buyers can be more confident that the structure of the price has changed. That’s the area where the selloff started, so erasing the losses will suggest that the sentiment took a turn for the better.