On Monday, June 15, 2022, bitcoin price reached a low not seen since mid-December 2020 when the price touched $20,080 per unit. A large number of crypto advocates are debating whether the drop is the bottom of the market or whether the drop could lead to deeper losses. At the time of writing, bitcoin is down 70% below the all-time high of $69,000 (ATH), but traditionally bitcoin has been known to drop about 80% or more from ATHs recorded in the past.
Will Bitcoin slide down more than 80% this time?
The crypto economy has had a rough few weeks as the leading crypto asset Bitcoin (BTC) shed 35% over the past 14 days. Speculators have gone from assuming it might be a bear market to saying it is definitely a bear market.
There have been many capitulations over the past few days and on Monday hundreds of thousands of crypto traders were liquidated for nearly $1.30 billion. Two days later, Bitcoin fell to a low of $20,080 per BTC and the last time BTC traded at this price 17 months ago in mid-December 2020.
At current USD levels, bitcoin is down 70% from the ATH of $69,000 it hit on November 10, 2021. During bull runs in 2013 and 2017, Bitcoin (BTC) fell more than 80% from its previous price peaks. Coingecko.com founder Bobby Ong tweeted on Bitcoin’s decline from past bull runs and he included Ethereum (ETH) in the 2017 runup.
For example, after BTC’s price peak in 2013 of around $1,127 per unit, BTC had fallen 82% to $200 per coin by 2015. Ong’s tweet shows BTC jumping to $19,423 per unit in 2017, but by 2018 the price had fallen to a low of $3,217, which was 83% below the price high.
The Coingecko co-founder explained that Ethereum fell by 94% during the 2017-2018 price cycle. Ong’s tweet was published on June 11, 2022, and at that time, BTC’s USD value was 59% lower than ATH and ETH’s value was 69% lower. At the time of writing, ETH’s dollar value is 75.4% below the crypto-asset’s all-time high ($4,815) set on Nov. 10, 2021.
Let’s do some math.
— Colin Talks Crypto — CBBI.info (@ColinTCrypto) June 15, 2022
Of course, there is a lot of speculation and theories as to whether or not the price of BTC will go down from here. An 80% drawdown of BTC’s ATH in 2021 would be around $13,800 per unit. If Ethereum were to see a 90% drop against the ATH over the past year, then the USD value would be around $488 per ether. Some speculators are predicting that BTC could reach $12,000 per unit and ETH $360 per unit.
Drop below $19,000 erases pre-halving price highs, bitcoin miners struggle, macro disasters continue to rock global markets
So far, more than $2 trillion in value has exited the crypto ecosystem since the crypto economy ATH last year. Traders are also worried about the next halving as prices must be much higher when miners only get 3,125 BTC per block found. A drop below $19,000 per BTC will wipe out previous pre-halving price highs. Additionally, using current BTC exchange rates and $0.12 per kilowatt hour (kWh), only seven ASIC mining rigs are recording consistent profits.
Bitmain’s Antminer S19 XP running at 140 terahashes per second (TH/s) yields an estimated profit of $3.49 per day at the same electricity cost of $0.12 per kWh. The 126 TH/s Microbt Whatsminer M50S yields an estimated $1.51 per day in BTC profit at the same cost of electricity. At $0.12 per kWh, machines producing 84 TH/s are not profitable unless they get cheaper electrical resources.
All of these signs, and the thousands of crypto employees who have been laid off over the past few weeks, arguably show that this is definitely a bear market. The question remains whether or not the 80+% drawdown will happen this cycle and how long the bear run will last.
Added to this are the macroeconomic catastrophes and concerns about rising inflation, central bank rate hikes and the ongoing war between Ukraine and Russia. Bitcoin steadily rose to its ATH while Americans and citizens from other countries received stimulus payments. While Bitcoin and the crypto markets have never experienced a Covid-19 lockdown economy before, neither has the crypto economy been tested under the current circumstances.
What are your thoughts on Bitcoin’s current price cycle? Do you expect an 80% drawdown from ATH last year? Let us know what you think about this topic in the comment section below.
photo credit: Shutterstock, Pixabay, Wiki Commons, Feature Illustration Contributor Vlastas, Chart by Venture Capitalist Datastream,
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