Bitcoin looks into the abyss and is about to drop below $20,000

Bitcoin looks into the abyss and is about to drop below $20,000

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A few days ago we talked about the collapse of the cryptocurrency market. Shortly after we saw that Bitcoin had started a slight recovery process, but in the end this turned out to be a mirage, as it plunged again and almost fell below $20,000. That figure represents the new “bottom” and has an important role on a psychological level for investors and analysts, although we must bear in mind that, in the end, we are talking about a cryptocurrency that in just a few months it has gone from being worth $69,000 to just over $20,000.

You don’t have to be an expert to see where the problem is, the high volatility of Bitcoin, and of cryptocurrencies in general, has shown its worst face, and has taken away more than two thirds of the value of said cryptocurrency. To better understand the seriousness of this, a simple example is enough, a person who bought 10 Bitcoins at its peak price, 69,000 dollars, he invested $690,000 and lost $490,000 in just over six months. At the time of writing this article, Bitcoin was in a phase of very marked instability, and after slightly exceeding $22,000, it fell back to $21,183.

Some believe that despite the fact that Bitcoin has lost 70% of its value, this is a good time to invest, since it is only a matter of time until the cryptocurrency gets back on its feet and recovers. Nevertheless, the general feeling in the crypto market is not goodand it is totally understandable, since we have seen corralitos and layoffs, and we also have an important precedent that shook the sector, the collapse of terraUSD.

Other pundits, such as Scottie Siu, Chief Investment Officer of Hong Kong-based Axion Global Asset Management, have taken a more realistic approach, saying literally: “I think we are still in the middle, unfortunately, the game is not over”. This means that we could still see further declines, and that it takes a while for the situation to finish stabilizing in the cryptocurrency sector.

The huge losses in value that cryptocurrencies have suffered has generated a quite chaotic situation on many fronts, and has even affected some countries, such as El Salvador, which has a significant reserve of Bitcoins. Right now there are two important questions that will mark the future of cryptocurrencies, when will they bottom out and when will the recovery process begin. However, we must not forget that also cThere is a possibility that there will be no recovery.

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