The price of bitcoin falls below $ 20,000

The price of bitcoin has fallen below the key psychological level of $ 20,000 as the brutal sale of cryptocurrencies has deepened.

Bitcoin fell to $ 18,739.50 for a moment and fell below $ 20,000 on Saturday, according to CoinDesk, losing 72% of its value from its highest level in November. Concerns about the Federal Reserve’s actions to tame higher-than-expected inflation have pushed both stocks and cryptocurrencies toward a bear market. Big names in the industry, incl

Coinbase Global Inc.,

the largest cryptocurrency exchange in the United States, recently announced job cuts.

“This will be a great pain for many investors,” said Yuya Hasegawa, a market analyst at Japan’s cryptocurrency exchange Bitbank Inc. People will lose confidence in the crypto market as a whole, but experienced crypto investors and those who believe in its long-term prospects will see an opportunity to buy at discounted prices, he said.

Ether, another major cryptocurrency, fell below $ 1,000, briefly reaching $ 975.35 on Saturday, according to CoinDesk, its lowest level since January 2021.

The fall of bitcoin from its record high of $ 67,802 in November contributed to the destruction of approximately $ 2 trillion in the wider market. Crypto’s total market capitalization, which peaked at nearly $ 3 trillion in November, totaled about $ 840 billion on Saturday, its lowest level since January 2021, according to data provider CoinMarketCap.

Bitcoin traded for about $ 30,000 for most of May, before falling sharply again in June after a new inflation shock and worries about rising US interest rates. Investors are landing assets considered risky, such as cryptocurrencies and technology stocks.

Individual investors have received margin claims, with about $ 260 million in collateral pledged by about 80,000 retailers liquidated in the past 24 hours, according to data provider CoinGlass. That compares to $ 1 billion earlier this week.

An increasing number of crypto companies, previously developing at a high level, are experiencing the pain of what is called “crypto winter”. Cryptocurrency lender Babel Finance told customers on Friday that it was stop repurchases and withdrawals from all products, citing “unusual liquidity pressures”. One of the largest crypto lenders, Celsius Network LLC, does not allow users to withdraw funds for about a weekreferring to extreme market conditions.

Hedge fund focused on cryptocurrencies Three Arrows Capital Ltd. face hired legal and financial advisers to help develop a solution for its investors and creditors after suffering heavy losses from widespread market sales of digital assets, the company’s founders told The Wall Street Journal.

The growth in cryptocurrency valuations over the last two years has been supported by investments with big names from companies such as

Tesla Inc.

and a period of lower interest rates during the pandemic, which encouraged home-dwellers to buy riskier assets in hopes of greater returns.

The interest rate hikes now being introduced by the Fed come at a time when explosions in some crypto projects have erupted in the ecosystem. The so-called stable coin TerraUSD broke from its fixed value of $ 1 last month after intense sales pressure, leaving it and its original sister cryptocurrency Luna now almost useless. As its developers sought to protect the fixation of TerraUSD, they sold bitcoin reserves, weighing on the price of it and other assets.

Crypto investors have recently become concerned about the cryptocurrency derivative ether, which has been locked until the Ethereum network switches to a less energy-intensive model. The so-called Lido-staked ether has recently been traded at a discount to the ether itself.

“Crypto has enough problems. It doesn’t need the macro, “said Noel Acheson, head of market insights at crypto lender Genesis Global Trading, about rising interest rates and inflation concerns.

Write to Elaine Yu c elaine.yu@wsj.com and Caitlin Ostroff in caitlin.ostroff@wsj.com

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