Bitcoin Price Careens Toward $20,000 as Cryptocurrency Rout Deepens

Cryptocurrencies prolonged their slide Wednesday, with bitcoin on the verge of falling under $20,000 for the primary time since December 2020.

Bitcoin’s worth fell to round $20,526.57 in early U.S. buying and selling. That marks a 6.7% drop from Tuesday’s 5 p.m. ET worth and a 70% plunge from a excessive of $68,990.90 reached in November 2021, in line with CoinDesk.

The rout in cryptocurrencies has worn out roughly 1½ years of beneficial properties for bitcoin, which began to soar on the finish of 2020 as speculative fervor washed over monetary markets.

Since late final yr, the air has been leaking out of cryptocurrencies, with buyers pulling again from riskier belongings in anticipation of easy-money market situations coming to an finish.

Two high-profile incidents in latest weeks have accelerated cryptocurrencies’ fall. In Could, the collapse of stablecoin TerraUSD and its sister token Luna prompted a selloff throughout cryptocurrencies. Then, on Sunday, Celsius Community, one of many largest crypto lenders, mentioned it was pausing all withdrawals, swaps and transfers, sparking additional panic.

The ache in cryptocurrency markets has been broad. The worth of ether, the in-house forex of the Ethereum community, fell to $1,054.27 Wednesday, down 11% from its 5 p.m. ET degree Tuesday. Cardano’s ada token and even joke cryptocurrency dogecoin slid.

The most recent signal of stress and confusion got here from a obscure tweet from the co-founder of Three Arrows Capital, a hedge fund that invested closely in cryptocurrencies. “We’re within the means of speaking with related events and absolutely dedicated to working this out,” the tweet mentioned. No additional element was supplied. Three Arrows didn’t instantly reply to a request for remark.

Selloffs continued to batter main U.S. inventory indexes, with the S&P 500 coming into bear-market territory Friday for the primary time in additional than two years. WSJ’s Caitlin McCabe seems to be at a few of the key causes behind the market volatility. Photograph: John Minchillo/Related Press

The autumn of cryptocurrencies coincides with a selloff in the stock market. Earlier this week, the S&P 500 entered a bear market, outlined as a drop of 20% or extra from a latest excessive. Losses have accelerated in latest days after higher-than-expected inflation knowledge for Could sparked worries that the Federal Reserve might have to boost rates of interest extra aggressively. The U.S. central financial institution’s price choice is due Wednesday.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com