Bitcoin has fallen to a two-year low, after losing a 10th of its value in a matter of hours on Tuesday.
According to CoinDesk, the world’s largest cryptocurrency crashed from $20,300 at 5 p.m. to $18,200 at 9 p.m.
By Wednesday morning, nothing had changed, and Bitcoin is now in danger of falling below $18,000 for the first time since November 2020.
The crash comes ahead of the latest consumer price index (CPI) report in the US on Thursday, which frequently has an impact on the value of cryptocurrencies.
Why did Bitcoin crash?
Bitcoin’s crash is partly linked to concerns over FTX, one of the world’s largest cryptocurrency exchanges.
Other major coins have also lost significant value, with Ethereum losing as much as 17% in the previous day.
FTX has seen a massive volume of withdrawals this week, leading to Binance, one of FTX’s largest competitors, deciding to liquidate its holdings of FTX’s FTT token., with CEO Changpeng Zhao citing “recent revelations”.
FTX CEO Sam Bankman-Fried responded by saying a “competitor is trying to go after us with false rumors”.
Over the last 24 hours, the cryptocurrency market has seen liquidations of around $344.26m from over 173,100 traders, according to data from Coinglass. More than 75% of these liquidations were long positions.
Will Bitcoin recover?
Since cryptocurrencies are notoriously unpredictable, meaning it is very difficult to forecast and no one can say with certainty how the market will respond after this crash.
According to Justin Hartzman, CEO of Coinsmart Financial, “Bitcoin is suffering due to external macro conditions.
Although he still sees hope for the future, he predicted that the coin might conclude 2022 at roughly $17,000.
“My 2025 price prediction will depend on the aftermath of the halving. If macro conditions improve and the regulatory environment gets better, then BTC price should be able to rise up,” he said.
The CEO of Bitcoin Reserve, Nik Oraevsky, claimed that the coin “has high beta with traditional markets.”
He added: “Traditional markets are in dire straits. All hangs on fiscal policy and jabber jawing of the Fed over the next quarter.”