Bitcoin has slipped below its main support level and is currently trading below $20,000 as the liquidity crunch rocks the sector

Bitcoin is trading at $19,213.64, down 3.96% in the last 24 hours. With the latest drop in its price, the digital currency has now deviated from its ATH price of $68,789.63 by no less than 72.04%.

The fall experienced by bitcoin is the result of several factors, first and foremost the global economic outlook which could soon push many countries into recession. The inflation rate has steadily increased, prompting monetary tightening by many central banks, from the United States to France and beyond.

Bitcoin is now considered an investable asset and like stocks, investor sentiment towards it is generally down at the moment. All of the factors leading to continued price declines are visible right now, and investors are likely to shy away from what they view as a risky investment in the face of uncertainty.

Industry-Wide Liquidity Pressure Impacts Bitcoin Price

The pressure on liquidity is permanent in the sector, although the origin of these operational disasters was not triggered by bitcoin, the consequences are particularly felt on the price of BTC.

Earlier this week, a court in the British Virgin Islands ordered the liquidation of Three Arrows Capital (3AC), as the company was found to be completely insolvent. Teneo Restructuring has been tasked with managing the liquidation process, and it is the second major blockchain startup to disappear this year.

The first was Terraform Labs, whose algorithmic stablecoin, UST, depreciated against the USD to which it was pegged 1:1. So did its sister token, LUNA, which crashed more than 99.9% in about a week, leading to billions of dollars in losses for many investors. As Terraform Labs tries to relaunch the protocol with a new token, exposed hedge funds like Three Arrows Capital have not recovered from the losses suffered.

Celsius Network is another name whose trust is at stake. With the cryptocurrency lender’s operations halted by a halt to withdrawals a few weeks ago, lawyers have advised the company to file for bankruptcy in under Chapter 11.

More companies have continued to experience these high-profile operational issues, a trend that generally puts pressure on bitcoin as the flagship representative of the fledgling ecosystem.

The continued fall in the price of bitcoin is currently reflected in altcoins, and even publicly traded companies like Coinbase whose primary interests are invested in digital currencies.

While many take a conservative approach to the ecosystem due to its current volatility, MicroStrategy Incorporated maintained a bullish stance, accumulating an additional 480 BTC units worth $10 million.

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