$20,000 is critical in Bitcoin. When the leading cryptocurrency drops to this level, heavy liquidations await firms borrowing against Bitcoin. Bitcoin investors’ short positions are a threatening margin call for lending platforms.
The analyst said that the Bitcoin price will see $ 20,000, triggering millions of dollars of liquidation.
Bitcoin is struggling to hold the support level at $20,000. On the other hand, investors and firms are currently locked in a “leverage war”. This thesis came from Bobby Lee, founder and CEO of Ballet Global, a crypto storage services provider.
Apparently, firms are struggling to prevent Bitcoin from reaching the liquidation point. Meanwhile, investors are shorting around $20,000. This volatile situation could cause shorts to win and push the price below $20,000. According to Bobby, a drop below $20,000 would be disastrous for firms that borrow against crypto.
Bitcoin will drop to $10,000
Still, Bobby predicts that current market conditions will force Bitcoin to retest $20,000. If that happens, the leading crypto is under threat at $19k followed by $18,000. The liquidation positions of many firms that borrow against Bitcoin are around $20,000. According to Bobby Lee:
I think we’ll test $20,000 and go for $19,000-18,000. There are a large number of Bitcoin borrowers with liquidation positions in the $20,000 range.
At the time of writing, Bitcoin is trading just $400 above this level. Therefore, retesting this support level could mean liquidation or the deployment of more collateral to create a lower liquidation position. Bobby Lee continues:
There are plenty of BTC pledged as collateral that will need to be sold when Bitcoin drops to the $15,000 to $20,000 range. I wouldn’t be surprised if Bitcoin drops to $10,000, but it’s a short-term pain. I’m still very optimistic in the long run.
Market is giving its second Terra test, with Celsius
Celsius turned into a Terra-like disaster. The protocol is the crypto community’s biggest concern as it struggles to survive with millions of DAI debts. In the coming days, a possible drop to $20,000 will bring some heavy liquidation from Celsius.
However, according to analysts like Peter Brandt, a retest of the $20,000 level will be a temporary relief for investors as BTC will experience a short bull run. However, this only works if a violation below the support level is denied. We, as Kriptokoin.com , have discussed Peter Brandt’s statements in this article.
What happens next?
For a while, the price of Bitcoin came very close, reaching its previous ATH of around $20,000. However, this level was kept fast each time. Then the price went up a little; It is unknown how long this level will last as the crypto winter hardens. All in all, a $20,000 breakout for Bitcoin will threaten the entire market with new bottoms.
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