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Bitcoin Drops Below $20,000 Again, As Pressure Continues To Mount On Crypto Market

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Bitcoin Drops Below $20,000 Again, As Pressure Continues To Mount On Crypto Market

(CTN News) – The price of bitcoin briefly fell below $20,000 on Wednesday due to factors ranging from macroeconomic concerns to issues with cryptocurrency companies.

According to CoinMetrics, the world’s largest cryptocurrency traded down less than 1% last night at around $20,070.77. Earlier on Wednesday, bitcoin fell to $19,841.

Ether and other digital coins were also lower.

Over the last two weeks, Bitcoin has been trading in a tight range and is unable to make a significant move above $22,000.

The narrative of looming recession and mushrooming inflation is guiding bitcoin lower today, according to analysts at cryptocurrency exchange Bitfinex.

As inflation remains high, central banks are also poised to raise interest rates further, causing fears of a recession.

U.S. stock markets fell on Tuesday, and futures remained under pressure on Wednesday. U.S. stock markets tend to move lower or higher in tandem with bitcoin movements.

According to Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, bitcoin will likely trade between $17,000 and $22,000 “for a while,” given current market sentiment and another expected interest rate hike in July from the US Federal Reserve.

Crypto liquidity issues

Over the last few weeks, a crash in cryptocurrency prices has wiped off billions of dollars from the cryptocurrency market, exposing major liquidity problems for firms.

A crypto lender Celsius halted withdrawals for users this month citing “extreme market conditions.” An exchange also paused withdrawals after a client defaulted on a debt.

In the meantime, prominent crypto hedge fund Three Arrows Capital defaulted on a Voyager Digital loan worth more than $670 million.

A credit line has been offered by FTX CEO Sam Bankman-Fried to struggling firms such as BlockFi and Voyager Digital.

After the falls, the market is taking a breather. As dominoes are propped up, there are still systemic issues,” Charles Hayter, CEO of CryptoCompare, told CNBC.

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