Bitcoin decreased early on Wednesday and was trading at $20,065 at the time of writing. At the beginning of the session, BTC dipped below $20,000. According to CoinMarketCap, BTC traded in a $20,226-21,164 range on Tuesday. The leading cryptocurrency has increased by only 17% from its swing low.
If BTC continues to slide down, its next support level would be at $19,670. The closest resistance level is located near $23,000.
Bitcoin has lost 57% of its value since the beginning of June and fell by 37% since January 2022.
BTC has slumped by more than 70% since it hit an all-time high of more than $69,000 in November 2021.
Ethereum lost 1.6% over the past 24 hours and slid down early on Wednesday as well. ETH was trading at $1,207 at the time of writing.
Out of top 10 cryptocurrencies by market cap, all assets declined over the past day, except for Binance USD. The worst performing cryptocurrency was Solana (-5.27%).
Over the past week, Dogecoin was the biggest gainer (+5.81%), while Bitcoin was the biggest loser (-0.32%).
According to CoinGecko, out of the top 100 cryptocurrencies by market cap, the best performing asset over the past 24 hours was TerraClassicUSD (253.9%), while Chiliz was the worst performing asset (-10.7%).
The market capitalization of the crypto market has fallen below $1 trillion from $3 trillion in November 2021. The market capitalization of stablecoins decreased as well, indicating that investors are pulling out funds from the crypto sector.
What caused the crash?
The key bearish factor for BTC is lower risk appetite among investors amid the latest US inflation data.According to the US Bureau of Labor Statistics, inflation reached 8.6% in May, the highest level since the winter of 1981.
The digital assets market also came under pressure from Fed monetary tightening.
During its policy meeting on June 14-15, the Federal Reserve increased the key interest rate by 75 bps to 1.50-1.75% for the first time since 1994.
At the following press conference, Fed chairman Jerome Powell stated that the interest rate could be also increased by 50-75 bps in July.
The collapse of Terra USD stablecoin and Luna in May 2022, which wiped out billions of dollars in several weeks, has also contributed to the crypto market's downturn.
Several crypto companies have begun laying off employees as investors dump risky assets.
Over the past several days, BTC miners downsized their operations to limit their losses, as energy prices soar amid the ongoing market crash. It is another key bearish factor for crypto. Small-scale companies have taken the full force of the impact and are now vulnerable to takeovers.
Amid the crash, crypto miners have been selling off their crypto reserves to help cover rising expenditures, operational costs, and debt payments.
Small-scale crypto mining companies lacking liquidity could put pressure on BTC in Q3 2022, analysts say. However, thanks to improvements in energy efficiency, mining costs have decreased to $15,000 per 1 BTC from $20,000 at the beginning of 2022.
Earlier, Arcane Research stated that bitcoin mining cash flow has fallen by 80% from its peak in November 2021.
Analysts also noted the weak position of BTC against the S&P 500. The index lost 12% since the beginning of June, but managed to recover most of its losses last week. Any downward movement of the index sends bitcoin downwards. At the same time, BTC remains unchanged when the S&P 500 moves upwards.