Bitcoin Crashes Below $20,000 For The First Time Since 2020

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Bitcoin falls below $20,000 for the first time since 2020

Bitcoin dropped below $20,000 for the first time since December 2020 as evidence of deepening stress within the crypto industry keeps piling up against a backdrop of monetary tightening. 

The largest token by market value tumbled more than 9% to $18,740.52 by early morning in London on Saturday, marking a record-breaking 12th straight day in the red according to Bloomberg data.

Ether breached $1,000 and dropped almost 11% to $975.24, the lowest since January 2021.

“Investors are continuing to position defensively following last year's liquidity-driven digital asset bull market,” Alkesh Shah, head of crypto and digital assets strategy at Bank of America Corp., said in a note on Friday.

“Although painful, removing the sector's froth is likely healthy as investors shift focus to projects with clear road maps to cash flow and profitability versus purely revenue growth.”

A toxic mix of bad news cycles and higher interest rates has been deleterious to riskier assets like crypto, contributing to a roughly 70% slide in Bitcoin from its all-time high in November.

The Federal Reserve raised its main interest rate on June 15 by three-quarters of a percentage point -- the biggest increase since 1994 -- and central bankers signaled they will keep hiking aggressively this year in the fight to tame inflation.

Broader signs of stress emerged with last month's collapse of the Terra blockchain, and worsened this week following crypto lender Celsius Network Ltd.'s recent decision to halt withdrawals. 

Adding to the mood, crypto hedge fund Three Arrows Capital suffered large losses and said it was considering asset sales or a bailout, while another lender, Babel Finance, followed in Celsius's