The crypto market pushes further down and seems poised for more losses as Bitcoin touches the low of its current levels. The number one crypto by market cap approaches a major support level, and if bulls failed to protect it, BTC’s price could return to its 2020 range.
Related Reading | By The Numbers: Bitcoin Suffers Largest Single Day Drop Since March 2020
At the time of writing, Bitcoin (BTC) trades at $21,800 with a 5% and 29% loss in the last 24-hours and 7-days, respectively. BTC’s price began to trend lower as a result of a series of bad news around major crypto companies, and the U.S. Federal Reserve (FED) shift to its monetary policy.
The general sentiment in crypto is fear as market participants are prepared for further losses. According to crypto exchange BitMEX Co-Founder Arthur Hayes, investors are hedging against downside price action by buying put (sell) options contracts.
Hayes claims that options platforms Deribit record a high Open Interest (OI), total open options contracts, for Bitcoin at $20,000 and for Ethereum at $1,000. In addition, Hayes believes other “massive” investment vehicles could be “centered around those strikes”, around those specific price levels.
In that sense, $20,000 seems like a critical support level for Bitcoin. This price point coincides with the 2017 bull-run peak when the price of BTC climbed from below $3,000 and into price discovery mode.
Previous all-time highs usually are key levels when an asset trends downside. A lot of people could have bought the 2020 rally beyond $20,000, and they might be unwilling to sell below this price. Hayes said the following:
As far as the charts go, you better get out your Lord Satoshi prayer book, and hope the lord shows kindness on the soul of the crypto markets. Because if these levels break, you might as well shut down your computer because your charts will be useless for a while.
If Bitcoin and Ethereum are unable to stay above those levels, Hayes predicts potential doom for the crypto market. As the FED begins to increase interest rates, the market seems ready for further losses even if BTC and ETH are in critical support. Hayes added:
If these levels break, 20k BTC and 1k ETH, we can expect massive sell pressure in the spot markets as dealers hedge themselves. We can also expect that there will be some otc (over the counter) dealers and that will be unable to hedge properly and might go belly up.
Related Reading | Has Bitcoin Hit Bottom Yet? Here’s What On-Chain Data Says
For the time being, the crypto market and traditional markets could see some relief as indicators enter oversold levels.
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