Bitcoin dropped below $20,000 on Saturday to its weakest in 18 months, extending a slide on investor worries about growing troubles in the industry and the general pull-back from riskier assets.The digital currency sector has been pummeled this week after cryptocurrency lending company Celsius froze withdrawals and transfers between accounts, while crypto companies started laying off employees and there were reports that a cryptocurrency hedge fund ran into trouble. It has coincided with an equities slide, with US stocks suffering the biggest weekly percentage decline in two years on fears of rising interest rates and growing likelihood of recession. Bitcoin, the biggest cryptocurrency dropped by 8% to $17,607, its lowest since December 2020.
It is down by about 59% this year, while rival cryptocurrency Ethereum is down by 74%. In 2021, Bitcoin peaked at over $68,000.
"Breaking $20,000 shows you that confidence has collapsed for the crypto industry and that you're seeing the latest stresses," Edward Moya, senior market analyst at OANDA, said. Moya also added that "even the loudest crypto cheerleaders from the big rally are now quiet. They are still optimistic long term but they are not saying this is the time to buy the dip."The sector has also suffered losses after companies such as Coinbase Global Inc (COIN.O), Gemini and Blockfi said they would lay off thousands of employees as investors ditch risky assets. The slide is hitting retail investors that bought into the asset.Jeffrey Gundlach, chief executive of DoubleLine Capital, said on Wednesday he would not be surprised if bitcoin fell to $10,000.Others say the deepening slide could force more investors to unload bitcoin, which rose along with other risky assets during the era of pandemic stimulus.