analysts are starting to worry

For the past few days, the queen of cryptocurrencies has been going through a period of turbulence.

Bitcoin is going through a turbulent period. In the space of a few days, the queen of cryptocurrencies returns to the threshold of 20,000 dollars. This Friday, around 9:00 a.m. French time, the asset fell by more than 7%, trading below $22,000. The weekend did not allow it to rise above this threshold either. At the time of writing, bitcoin is still trading around $21,300.

A level that cryptocurrency had not reached since… two months, following the two crypto-crashes that weakened the entire system. Explanations can be found on the side of the Federal Reserve (Fed) announcements, as explained in an article by BFM Crypto. And a question arises: should we worry about such a fall?

$210 million in long positions liquidated

In this context, some concerns are emerging on the side of analysts. On the one hand because in the field of cryptocurrencies, a lot of investors place themselves with large positions sitting on minimum levels. This is called “Hodl” in crypto language (and not “Hold” as on the stock market) which means that you buy an asset and don’t touch anything anymore.

This is the classic position of so-called “Whales” who hold large positions in cryptocurrencies. Simply, if their levels are depressed, they sell everything. According to specialist media The Block, $210 million in bitcoin long positions were liquidated on Friday

“It was the biggest sell-off event since June, when the market crashed following widespread rumors of Three Arrows Capital’s potential insolvency,” the outlet said.

This means that many thresholds are suddenly lowered: both the threshold of 24,000 dollars, then 23,000 dollars. There was also a very important area of ​​$22,000 which also didn’t hold: now bitcoin is trading around $21,000 and wheelbarrows, with 6 straight declines, with no sign of stabilizing or rebounding. As a reminder, bitcoin had reached its highest level, at $69,000 in November 2021.

Around $20,000?

However, the slightest relapse towards 20,000 dollars will agitate everyone. Both large and small investors for whom $20,000 is a truly symbolic threshold. As a result, the market finds itself in a rather worrying downtrend, in a market segment that is the first to suffer from risk phases in the financial markets. And beyond all that, we’ve been talking about it all summer, we’re in an ecosystem that’s struggling to regain some maturity and momentum after the June crypto crash.

Some players are still in very precarious health, with platforms and lenders still struggling with liquidity problems, like the platform Celsius which has been in bankruptcy for a month. So clearly the crypto winter is not over.

Antoine Larigaudrie edited by PA

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