What Happens If Bitcoin Drops Below $20,000?

Bitcoin: As bearish sentiment swept the financial markets, experts are weighing whether the Bitcoin price will drop below $20,000 and what could happen if it does.

Some experts believe that Bitcoin will fall further

Bitcoin is currently approaching $20,000, with the ATH price a massive drop from $69,000 right now. All eyes are on $20,000 support at the moment. This level is also the peak of Bitcoin’s last bull run in 2017. In previous bear markets, Bitcoin never fell below the price marked by the top of the bull run. The difference this time around, however, is that Bitcoin has come closer to this level than ever before.

Sam Callahan says 80% drop is possible for Bitcoin

Swan Bitcoin analyst “Sam Callahan” shared his predictions based on experience from previous bear markets. The analyst says that Bitcoin could drop more than 80% from the ATH level, as it did when it dropped to just over $3,000 in December 2018. This means that Bitcoin has dropped as low as $13,800 this cycle. But Callahan isn’t that worried if he is. The analyst says:

It is important to note that Bitcoin’s investor base is very different and more complex compared to previous bear markets. If Bitcoin drops below $20,000, I think we will see significant buying pressure at these discounted price levels as Bitcoin’s long-term value proposition remains intact.

Bitcoin Predictions from 4 Analysts

Yuya Hasegawa, a crypto market analyst for Japanese crypto exchange Bitbank, shares this sentiment. Last month, Hasegawa said that Bitcoin could drop as low as $12,200 during this bear market. But now, his perspective is more optimistic. According to Hasegawa:

I think Bitcoin could temporarily drop below $20,000. However, it will likely recover the level around it quickly.

But not everyone is that optimistic about Bitcoin

Global Block analyst “Marcus Sotiriou“ believes $20,000 will bring further drops. Sotiriou pointed to the controversy surrounding crypto lending firm Celsius, the possibility of the company going bankrupt, and the blatant liquidity crisis that forced it to pause all user withdrawals earlier this week. In his current analysis, Sotiriou lost:

Celsius is in big trouble. If the whales investing in Bitcoin and Ethereum are liquidated, this will cause more negativity. I think many are afraid of a liquidation cascade occurring as Celsius is called margin and currently has a liquidation price of around $17,000 in BTC positions.

Forced liquidations occur when investors have to unexpectedly and inadvertently close accounts in Bitcoin derivatives (such as futures and options) after reaching insufficient collateral to hold those positions. This type of forced selling puts additional downward pressure on the Bitcoin price. This then threatens the price with further declines. It also causes more liquidation.

Arthur Hayes expects these levels in BTC and ETH

Arthur Hayes, the former CEO of BitMEX, also highlighted the potential of this type of risk on Twitter yesterday. Pointing to the crypto derivatives market, Hayes noted that most open positions (the number of futures and options contracts yet to be settled) are currently $20,000 for Bitcoin and $1,000 for Ethereum.

Hayes explained that as the market approaches these levels, investors with open positions will need to sell their crypto on the spot market to hedge their positions. If these levels break, BitMEX’s former CEO says, “we can expect massive selling pressure” in the market. To make matters worse, Hayes advises crypto investors:

You can turn off your computer because the graphics are useless for a while.

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Larry Brown

I graduated from Yale University, Department of Television. I have been a professional news writer for 3 years. I am continuing my career here by establishing amknews.com site 3 months ago.