Massive Panic Expected If Bitcoin Breaks $20k Level, Where Could It End?

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Last Updated on 17 June 2022 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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Jay Powell, the Federal Reserve chairman, announced the biggest rate hike since 1994 and, after a 1 day relief rally, stock markets in the USA fell again. Bitcoin, Ethereum and other major crypto coins, were able to recoup some of the losses of the past few days and things looked temporarily brighter on Thursday. By Friday morning not so much anymore though.

Analysts warn that this is only the beginning and that any close for Bitcoin below $20k at this point could cause panic.

Advertentie.

Stop losses

A stop loss is an automatic order that allows you to take profits on a certain trade whenever the value of the good that you have acquired falls below a certain level. If you bought Bitcoin back in 2015 or so for only a few $100, then you probably set a stop loss at a level which you feel is safe for you to take profits.

Many HODLers (hold on for dear life) and long term Bitcoin investors have set this stop loss at $20,000, because they feel that if Bitcoin were to close below this level, panic would set in the markets and you would see another major selloff rapidly. However, given that we nearly closed around this number yesterday, that day might be fast approaching.

Furthermore, as Economist Max Krueger pointed out, the effects of such a price fall would also be disastrous for mining companies, who’ve set their operations with a price far above this to be profitable. He stated: 

Many miners would be in deep trouble with $BTC in the teens, panicking yesterday in anticipation of 20k breaking makes sense.

FX Street summarized their current Technical Analysis as follows:

While things are looking up for Bitcoin price, a failure to move above the $23,480 resistance barrier will prematurely stop the relief rally. If BTC produces a weekly candlestick close below the 200-week SMA at $22,383, the downtrend will likely continue.

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