The bitcoin price—dropping under the psychological $20,000 barrier that it first topped in late 2017 before entering a three-year bear market—has lost around $10,000 from its price since earlier this month as fears over Federal Reserve monetary tightening and the rising risk of a recession drag on asset prices across the board. Ethereum and other major cryptocurrencies BNB BNB , XRP XRP , solana and cardano have all crashed along with the bitcoin price.
Ahead of the latest crypto crash, billionaire investor Jeff Gundlach warned he wouldn’t be surprised to see the bitcoin price fall further to hit $10,000—calling the trend in crypto “clearly not positive.”
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“When it broke below $30,000, it looked on a chart basis $20,000 was going to happen quickly, and it did. The trend in crypto is clearly not positive,” Gundlach, the chief executive of DoubleLine Capital, CNBC this week.
“It looks like it’s being liquidated. I’m not bullish at that $20,000 or $21,000 on bitcoin. I wouldn’t be surprised at all if it went to $10,000.”
Meanwhile, the ethereum price has dipped under the closely-watched $1,000 per ether level, down 10% over the last 24 hours, while BNB, XRP, solana and cardano have all lost a similar amount. The combined crypto market has lost around $400 billion over the course of this month, plunging the combined market capitalization below $1 trillion, down from $3 trillion in November last year.
Earlier this week, Arthur Hayes, the influential co-founder of the bitcoin and crypto exchange BitMEX, warned of “massive selling pressure” if the bitcoin price breaks below $20,000—telling traders they “might as well shut down [their] computer.”
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The brutal bitcoin and crypto crash was partly sparked by the collapse of top ten cryptocurrencies luna and its dollar-pegged so-called algorithmic stablecoin last month.
Problems were then exacerbated by major crypto lender Celsius halting withdrawal just this week. Elsewhere, well-known crypto hedge fund Three Arrows Capital is thought to be on the verge of collapse after its chief executive Su Zhu attempted to reassure the market, posting to Twitter the fund is “fully committed to working this out.”
“We’ve already seen around the edges some blowups in parts of the crypto world, and that could be foreshadowing some problems,” Gundlach said.
This week, the Federal Reserve hiked interest rates by 75 basis points—its largest hike since 1994—as it tries to drive down runaway inflation. The Fed’s increasingly hawkish stance has spooked investors that had piled into risk assets over the last two years.