Bitcoin is falling below $ 18k, trading below its unprecedented cycle

After each bitcoin spread, a bull run occurred which resulted in a new all-time high. To date, the price has never fallen below the highest price of a previous cycle – to date.

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Bitcoin falls below the all-time high

Bitcoin (BTC) has fallen below all-time highs from a previous cycle for the first time in its history. That’s $ 19,750. In the opening hours (GMT) on June 18, BTC fell to $ 18,750, then rose to as low as $ 17,600.

Notice

Despite a slight boom, BTC is still below its 2017 peak at press time, trading at $ 18,310.

After each bull run in half and beyond, Bitcoin was always above the peak of the previous cycle. Reversing this trend brings us into a whole new world of price discovery for bitcoin.

Bitcoin has been tackled by three and a half events: 2012, 2016 and 2020.

Each time half is done, the block reward is halved, which increases the shortage. Therefore, the expansion results in a lower supply. The price rises when supply goes down, but demand stays the same or goes up.

After 2012 and the first half, Bitcoin did not fall back to $ 32. After 2016, it never went back to $ 1,200. But by 2020, the price has dropped to $ 19,100.

Macroeconomic Factors

The mitigating circumstances of the current macroeconomic climate are putting Bitcoin in a position never seen before in its history. From 2009 to 2022, Bitcoin did not have to survive a global economic crisis outside the Web3 ecosystem.

Since its inception, Bitcoin has relied on events directly related to the blockchain. But now it has to deal with the downturn caused by a global pandemic, the war in Ukraine, rising inflation and the impending recession.

Meanwhile, the collapse of Terra LUNA as well as the potential bankruptcies of Celsius and Three Arrows Capital (3AC) have ravaged the crypto markets in recent weeks. Given this environment, it is not surprising that Bitcoin is in uncharted territory.

And: Given the continued rise in inflation and only small increases in interest rates, Bitcoin could continue to trade at an all-time low.

Interestingly enough, on Saturday morning, the price of bitcoin dropped from $ 20,400 to $ 19,100 in less than an hour. Subsequently, it fell more to $ 18,750 and traditional financial markets closed.

The sharp decline in such a short period of time suggests a prolonged eruption or other liquefaction events of some kind. Many funds, wallets and lending platforms have had to allocate more funds in recent weeks to ensure that loans are adequately collateralised.

The price of bitcoin is believed to have fallen due to the liquidation of a number of significant collateral sites with bitcoin. According to CoinGlass, $ 250 million has been liquidated in the last 24 hours. And continued downward pressure could exacerbate the situation through liquidation.

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Text credit: Cryptoslate

Last updated June 19, 2022