Bitcoin Price Climbs Above $20,000 After Strong Crypto Selloff

Bitcoin price dipped below $18,000 on Saturday before bouncing back above $20,000 on Sunday night, a level widely watched by cryptocurrency enthusiasts.

Bitcoin rose 10% to $20,571.29 on Sunday evening after falling to $17,601.58 on Saturday afternoon, according to CoinDesk. The digital currency fell below $20,000 on Saturday, raising fears that it could plunge further. It has lost 70% of its value from its peak in November.

Concerns over Federal Reserve actions to rein in higher-than-expected inflation have pushed stocks and cryptocurrencies into a bear market. Big names in the industry, including Coinbase Global Inc.,


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

WSJ’s Dion Rabouin explains why Wall Street is now betting big on crypto and what that means for the new asset class and its future. Photo composition: Elizabeth Smelov

“Bitcoin breaking the $20,000 price level was a long time coming, given the pessimism we have in the market,” AvaTrade market analyst Naeem Aslam said. The fallout from the collapse of the Terra USD stablecoin in May will continue to reverberate, he said, and it is depressing sentiment.

There is no specific significance at the $20,000 level, but the price slipped below $19,783, a previous high set in 2017, according to Coinbase. Bitcoin bulls have long maintained that the cryptocurrency has entered a new stage of development and acceptance in recent years, and that it will not fall below this 2017 level.

“It will be very painful for many investors,” said Yuya Hasegawa, market analyst at Japanese crypto exchange Bitbank Inc. People will lose faith in the crypto market as a whole, but seasoned crypto investors and those who believe in its long-term prospects will see an opportunity to buy at discounted prices, he said.

For Wayne Sharp, a retired investment adviser in Columbus, Ohio, the cratering crypto market came as no surprise. She bought around $10,000 worth of bitcoins in 2020 and has been sitting there ever since, with no intention of selling or buying more. “I saw a lot of cycles. I’ve been watching this for 45 years,” she said. “Humans just make the same mistakes over and over again.”

Ether, another major cryptocurrency, jumped 19% to $1,141.52 after falling below $1,000 on Saturday. It traded as low as $880.93, according to CoinDesk, its lowest level since January 2021.

Bitcoin’s fall from its all-time high of $67,802 in November contributed to an estimated $2 trillion wipeout in the broader market. Crypto’s total market capitalization, which peaked in November at nearly $3 trillion, stood at around $834 billion on Saturday, its lowest level since January 2021, according to data provider CoinMarketCap.

Bitcoin traded around the $30,000 mark for most of May before falling again in June after another inflationary shock and concerns over rising US interest rates. Investors offloaded assets considered risky, such as cryptocurrencies and tech stocks.

Individual investors received margin calls, with about $349.25 million in collateral pledged by about 88,415 retail traders liquidated in the past 24 hours, according to data provider CoinGlass. That compares to $1 billion earlier this week.

More previously high-flying crypto firms have felt the pain of what has been dubbed a “crypto winter.” Cryptocurrency lender Babel Finance told clients on Friday it was suspending redemptions and withdrawals of all products, citing “unusual liquidity pressures.” One of the biggest crypto lenders, Celsius Network LLC, did not let users withdraw funds for about a week, citing extreme market conditions.

Cryptocurrency-focused hedge fund Three Arrows Capital Ltd. has hired legal and financial advisors to help find a solution for its investors and lenders after it suffered heavy losses from a market sell-off of digital assets, the company’s founders told The Wall Street Journal.

The sudden squeeze on available and usable capital, often referred to as liquidity, is exacerbating selling, and it’s not something that can be easily fixed, said Ryan Shea, an economist at crypto investment firm Trakx. Unlike traditional markets, “there is no central bank to step in and step in, the process just has to happen,” he said.

The surge in cryptocurrency valuations over the past two years has been helped by investments from big-name companies such as Tesla Inc.

TSLA 1.72%

and a period of lower interest rates during the pandemic that encouraged individuals stuck at home to buy riskier assets in the hope of higher returns.

The interest rate increases currently enacted by the Fed come as blowouts in some crypto projects have rippled through the ecosystem. So-called stablecoin TerraUSD broke its $1 peg last month after intense selling pressure, leaving it and its original sister cryptocurrency, Luna, now nearly worthless. As its developers sought to defend TerraUSD’s peg, they sold reserves of bitcoin, depressing the price of it and other assets.

More recently, crypto investors have been concerned about a cryptocurrency ether derivative that is locked until the Ethereum network switches to a less energy-intensive model. The so-called Lido staked ether recently traded at a lower price than the ether itself.

“Crypto has enough problems. He doesn’t need the macro,” said Noelle Acheson, head of market insights at crypto lender Genesis Global Trading, in reference to rising interest rates and inflation concerns.

Write to Elaine Yu at and Caitlin Ostroff at

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Post expires at 3:49pm on Thursday June 30th, 2022