Bitcoin falls below $20k, causing an earthquake in the crypto market

Bitcoin fell below $20,000 for the first time since December 2020, as evidence of escalating stress in the crypto industry mounts against the backdrop of monetary tightening.

In the early hours of Saturday, Bitcoin slid as much as 6% to $19.3K. The most valuable cryptocurrency in terms of market capitalization has been falling for the past 12 days. Ether momentarily broke under the $1K mark at the time of writing this report, its lowest level since January 2021, before recovering. Fears of a recession are suffocating enthusiasm

Recall some days ago, the Federal Reserve hiked its key interest rate by three-quarters of a percentage point, the largest increase since 1994, and monetary policymakers indicated that they will continue to hike aggressively this year in the fight against inflation.

A higher-rate environment has harmed riskier assets like cryptocurrency, contributing to Bitcoin’s 70% drop from its all-time high in November.

After last month’s collapse of the Terra blockchain and the subsequent move by crypto lender, Celsius Network Ltd. to restrict withdrawals, a market that began falling late last year on predictions of a less flexible Fed is now showing symptoms of widespread turmoil. Three Arrows Capital, a crypto hedge fund, incurred big losses and said it was shutting down, adding to the gloom.