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Here’s What Would Happen If Bitcoin Breaks Below $20K, Arthur Hayes Predicts

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The cryptocurrency market continues to fall and appears to be poised for more losses as bitcoin hits the lows of its current levels. The number one cryptocurrency by market capitalization is approaching a major support level, and if the bulls fail to protect it, BTC price could return to the 2020 range.

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| In the numbers: Bitcoin experiences its biggest one-day drop since March 2020

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At the time of writing, Bitcoin (BTC) is trading at $21,800 with a 5% and 29% loss in the last 24 hours and 7 days, respectively. The price of BTC began to decline as a result of a series of bad news about large cryptocurrency companies and the transition of the US Federal Reserve System (FRS) to its monetary policy.

BTC price is trending down on the 4-hour chart. Source: BTCUSD Trading Review
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The general mood in cryptocurrency is one of fear as market participants are ready for further losses. According co-founder of the BitMEX crypto exchange Arthur Hayes, investors insure against price drops by buying put option contracts (sales).

Hayes claims Deribit options platforms are recording high open interest (OI), total open option contracts for Bitcoin at $20,000 and for Ethereum at $1,000. In addition, Hayes believes that other “massive” investment vehicles can be “focused around these strikes”, around these specific price levels.

In that sense, $20,000 seems like a critical support level for Bitcoin. This price point coincides with the bullish peak of 2017, when the BTC price rose from below $3,000 and went into price discovery mode.

Previous all-time highs are usually key levels when an asset is moving down. Many people could buy a 2020 rally for more than $20,000 and they might not want to sell below that price. Hayes said the following:

As for the charts, you better get your Lord Satoshi prayer book out and hope the Lord will show kindness to the soul of the cryptocurrency markets. Because if those levels break, you can shut down your computer because your graphs will be useless for a while.

Could Bitcoin enter a black hole?

If Bitcoin and Ethereum fail to hold above these levels, Hayes predicts the potential doom of the cryptocurrency market. As the Fed begins raising interest rates, the market appears poised for further losses even if BTC and ETH find themselves in critical support. Hayes added:

If these levels break 20K BTC and 1K ETH, we can expect strong selling pressure in the spot markets as dealers hedge themselves. We can also expect that there will be some over the counter (OTC) dealers who will not be able to hedge properly and may go broke.

| Has Bitcoin already bottomed out? Here’s what the data on the chain says

Currently, the cryptocurrency market and traditional markets may experience some relief as indicators enter oversold levels.

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