Bitcoin (BTC) has fallen below $18,000 for the first time since November 2020, when Bitcoin was starting its bull run that pushed its price towards $69,000 a year later. This recent sell-off started in May with the implosion of the Terra (LUNA) ecosystem and continued with the lack of stability of the Celsius platform, which paused withdrawals from its platform. But how low can Bitcoin fall?
Bitcoin Searches for a Bottom
Bitcoin is currently searching for a bottom that would help the virtual currency get stabilized above its current price level. There have been many reasons for Bitcoin to reach its current situation. The bear market started when Bitcoin hit $69,000 in November 2021, and the market turned downwards.
Despite a relative stabilization in the first months of 2022, Terra’s implosion created a very hard and difficult situation for virtual currencies. Therefore, this could be considered one of the first catalysts to understand why Bitcoin is being traded at these price levels today. Indeed, Terra was just the beginning.
Over the last few weeks, several projects and market participants that have been offering services to customers showed that their business model was not as accurate as it should have been. For example, Celsius had to pause withdrawals in order to be able to honour its debts to users.
Due to this reason, the market continued moving lower. Three Arrows Capital (3AC), one of the most respected hedge funds in the crypto market, has been affected by this market downturn as well. Analysts revealed that they could face some liquidations, which could create further problems for investors in the cryptocurrency market.
This has created a situation in which Bitcoin has fallen below $20,000 and Ethereum (ETH), the second-largest digital asset, has also been pushed lower. Ethereum, for example, was traded for a short period of time below $900, the lowest price since January 2021.
Some other smaller coins are experiencing even harder problems, especially DeFi coins that have been inflationary over the last years just to be able to reward users. With a crypto market that is escaping from risk assets and inflationary coins, DeFi assets are at a larger risk of experiencing a sell-off.
PancakeSwap (CAKE) lost 94% of its value from its all-time high on April 30, 2021. $BANANA, the digital currency of the ApeSwap platform on the Binance Smart Chain (BSC) ecosystem is 99.4% down from its all-time high on May 02, 2021.
Another thing that has also affected users’ trust in the ecosystem is related to Tether being attacked. While there has been a lot of FUD around Tether and not being able to redeem users’ USDT for real USD, Tether’s website has received a 400,000% increase in requests through a DDOS attack, according to Paolo Ardoino, CTO at Bitfinex.
This morning @Tether_to received a ransom request to avoid mass DDOSes.
They tried already once.
On a normal day we have around 2k reqs/5min
The attack brought us to 8M reqs/5min. pic.twitter.com/rWEan5VNFX
— Paolo Ardoino (@paoloardoino) June 18, 2022
He then explained on Twitter that the attack has now been mitigated. Nonetheless, the crypto community continues to be on high alert about anything that could happen to some of the largest projects in the industry.