Bitcoin returned to the bottom of its current range and could experience further downward pressure in the coming days. The cryptocurrency is still recovering from the collapse of FTX, the former second major crypto exchange in the world, and the contagion unleashed on the industry.
At the time of writing, Bitcoin has registered a spike in selling pressure. The cryptocurrency is trading at $16,200 with a 2% loss in the past 24 hours. Other assets in the crypto top 10 are recording similar price action, but the majority maintain last week’s gains.
Bitcoin may crash to 2020 levels amid FTX collapse
A report from Bloomberg claims that some institutional investors are bearish on Bitcoin. Mark Mobius, veteran fund manager and founder of Mobius Capital, believes Bitcoin could fall to $10,000 in the medium term.
The fund manager claims that the crypto industry may become more contaminated. Since the crypto exchange went bankrupt, several companies have ceased operations. Genesis, the company of the Digital Currency Group (DCG), is a prominent case.
The company has stopped accepting withdrawal requests from its customers and is scrambling to raise capital to avoid bankruptcy. The situation has led many to speculate about DCG’s solvency. The rumors add to the uncertainty in the crypto market.
In this context, the price of Bitcoin and other assets is moving sideways. BTC is likely to follow this trend in the coming weeks. Mobius classified the current environment as “too dangerous” to invest its clients’ money.
Despite the current market conditions and the collapse of FTX, the fund manager believes that crypto will play a permanent role in global finance, suggesting a long-term bullish bias:
But crypto is here to stay as there are several investors who still have faith in it. It’s amazing how Bitcoin prices have held up.
Bitcoin options players are expecting Doom for December
Further data from Bloomberg, based on the options platform Deribit, points to significant open interest trending towards the put side (sell contracts) for December. By the end of 2022, many investors expect the value of Bitcoin to hover around $10,000.
However, this data can also be interpreted as many investors hedging their spot-long positions. Investors buy Bitcoin on exchanges and to protect against potential downside pressure, they buy put contracts.
NewsBTC reported that many investors are aiming for Bitcoin at $30,000 by the end of the year. In this sense, the price of Bitcoin can rise or fall without affecting these investors’ portfolios. As shown below, the maximum pain prize is $20,000; this price could most likely be the December target.