Bitcoin is facing a very tough time after plunging below the key $20,000 level over the weekend, according to a UBS strategist, who said the token’s continued decline is causing market sentiment to deteriorate of cryptography.
James Malcolm, head of foreign exchange strategy at UBS, told Insider on Monday that the spirit of collaboration that prevails in the cryptocurrency market is giving way to an “every man for himself” attitude, which is likely to sow seeds. more problems.
Bitcoin crashed under the $20,000 key threshold over the weekend, plunging as low as $17,660, according to Bloomberg prices. The world’s largest cryptocurrency recovered some ground on Sunday and Monday and rose slightly to around $20,620 as of 5:50 a.m. ET.
Cryptocurrencies have tumbled as well as tech stocks, as investors shed investments deemed risky as the Federal Reserve sharply hikes interest rates and the global economy slows.
The $20,000 price is important to many investors as bitcoin surpassed this level in 2017. A drop below levels seen five years ago represents a blow to the thesis that bitcoin is on a solid trajectory. ascending as more and more people become interested in it.
“We obviously beat high levels and that was pretty critical. The feeling gets worse the further we go,” Malcolm said.
He said recent turmoil at investment firms such as Celsius and Three Arrows Capital was a sign of high levels of stress in the market.
“There’s this narrative that crypto is extremely collaborative compared to trad-fi,” Malcolm said, referring to traditional finance. “And one of the things that has become very obvious is that it’s kind of every man for himself now.”
He said the outlook for bitcoin and other tokens was quite bleak, although he said a stabilization in broader financial markets could bring some calm to crypto.
“It’s hard to think we’re out of the woods for a bunch of reasons,” Malcolm said. “The regulatory element, which will be the biggest hurdle for crypto, has yet to bite in any meaningful shape or form.”
He said weekends will continue to be difficult as low trading volumes lead to greater price swings. “There are a lot of things that suggest prices can stay low,” he said.