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Bitcoin tied above $20,000 in the past week, and its ability to stay above this level due to the FOMC announcement had sparked speculation that the digital asset had finally bottomed out. However, recent developments and bitcoin’s drop below $20,000 have proven that this is not the case. In fact, it points to a further decline in the market that could drag the cryptocurrency to even lower lows.
Soil is not in
Bitcoin is now trading in the $19,000 which has completely destroyed the expectation that the bottom was already at $20,000. Despite largely diverging from many established trends, the digital asset seems to stay true to the fact that it will eventually lose more than 80% of its all-time high before the next bull rally kicks in.
If so, it is possible that the market will see lows below $17,000. Now the question becomes what would cause such a price drop and it can easily be traced to the ongoing battle between Binance and FTX.
The market is already feeling the effects of: Binance Wants To Dump Over $500 In FTT, which has already led to a price drop of more than 30% of the token. However, as is often the case in the crypto market, it is not localized to just FTT. The effects are being felt in other cryptocurrencies, such as bitcoin, which has lost about $1,000 of its value in the past 24 hours alone.
BTC price falls below $20,000 | Source: BTCUSD on TradingView.com
Will Bitcoin recover?
A recovery in the bitcoin price is not up for debate, as recovery after a price decline is always inevitable. However, a significant recovery from this point is not expected as bitcoin has not yet bottomed out. And until this happens, it is likely that bitcoin will not break above $22,000.
There were also significant sell-offs in the market after last week’s price hike. Investors had taken advantage of this to secure some quick short-term gains, but the result was a $20,000 loss of support.
For bitcoin, due to the high correlation, it comes down to the current macro environment. Until there is settlement, it is likely that the digital asset will not see a significant value pump. The disruption in the macro environment and ongoing issues with Binance and FTX point to a further decline for bitcoin.
Featured image from Analytics Insight, chart from TradingView.com
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