Bitcoin struggled to stay above the key $20,000 threshold Monday as the leading cryptocurrency weathers a prolonged selloff that has sparked fear and uncertainty among investors.
Bitcoin, the world’s largest cryptocurrency by market capitalization, rose a modest 4% to $20,648 as of 11:30 a.m. ET on Monday, according to data from Coinbase.
The slight upswing followed a dismal weekend in which bitcoin plunged below $20,00 for the first time since December 2020, hitting a low of $17,592.
While the $20,000 threshold is mostly symbolic, it is widely viewed as psychologically important to crypto investors.
However, even after the increase, bitcoin is down more than 50% so far this year and roughly 70% from its all-time high of $69,000 last November.
And it might not have bottomed out yet, experts warn.
“Bitcoin’s weekend dip was, to put it simply, not deep enough,” Yuya Hasegawa, a crypto market analyst at Bitbank, told CNBC.
“The macro environment has not really changed from last week’s FOMC meeting: there still has not been a clear sign of inflation coming down and the Fed may still drive the economy into recession by raising rates too aggressively or simply by failing to tame inflation,” Hasegawa added.
Now, some heavily invested entities, such as software firm MicroStrategy, face margin calls for more collateral if bitcoin’s price continues to plummet.
Crypto prices have been volatile for months as markets react to the Federal Reserve’s move to tackle inflation by hiking interest rates – a plan that has prompted mounting fears that the US economy will tip into a recession.
Investors have steadily unloaded stocks and riskier assets in anticipation of tighter economic conditions. The Fed hiked interest rates by three-quarters of a percentage point earlier this month and is expected to implement a similar bump in July.
Bitcoin’s muted rally on Monday was mirrored in other cryptocurrencies. Ethereum rose more than 7% to $1,126, while Solana jumped nearly 7% to $34.91.
Crypto lender Celsius Network was among the platforms most severely impacted by the recent downturn. The entity paused bitcoin withdrawals last week due to extreme market conditions and informed users on Monday that it still needed more time to address the situation.
“We want our community to know that our objective continues to be stabilizing our liquidity and operations. This process will take time,” Celsius Network said in a blog post.
Bitcoin’s price plunge has sparked fears of a so-called “crypto winter” of sustained losses. Multiple crypto firms have begun layoffs in a bid to protect their balance sheets.
As The Post reported, Coinbase recently laid off 18% of its staffers, with CEO Brian Armstrong warning that the economy appeared “to be entering a recession.” Gemini, the trading platform co-founded by the Winklevoss twins, also cut 10% of its workforce.