Bitcoin goes past psychological threshold of $20,000 after significant drop

The price of a bitcoin inched above USD 20,000 on Sunday after the broader crypto selloff dragged it below the significant psychological threshold a day earlier.

The price of the world's most popular cryptocurrency was USD 20,129.70 as of Sunday afternoon. On Saturday, bitcoin had plunged as much as 9.7 per cent to less than USD 18,600 by late afternoon on the East Coast, according to the cryptocurrency news site CoinDesk. At some points during Saturday, it was below USD 18,000.

On Sunday, though, the volatile cryptocurrency climbed higher, though it is still more than 70 per cent below its November 2020 all-time high of nearly USD 69,000. Many in the industry had believed it would not fall under USD 20,000 again.

Ethereum, another widely followed cryptocurrency that has been sliding in recent weeks, took a similar tumble Saturday to well below USD 1,000 but also regained ground Sunday, adding nearly 11 per cent to USD 1,101.81.

The cryptocurrency industry has seen turmoil amid wider turbulence in financial markets. This past week was Wall Street's worst since 2020, during the early days of the coronavirus pandemic.

Investors are selling off riskier assets because central banks are raising interest rates to combat quickening inflation. Higher rates can help bring down inflation, but they also heighten the chances of a recession by increasing borrowing costs for consumers and businesses and pushing down prices for stocks, and other investments like cryptocurrencies.