Crypto markets face a long road back after bitcoin plunges below $20,000 as an 'every man for himself' attitude spreads, UBS strategist says

• Crypto is set for a highly difficult period after bitcoin plunged below $20,000, a top UBS strategist has said.
• James Malcolm told Insider crypto's collaborative spirit has given way to an "every man for himself" attitude.

Bitcoin faces a highly challenging period after plunging below the key $20,000 level over the weekend, according to a strategist at UBS, who said the token's ongoing slide is causing sentiment in crypto markets to sour.

James Malcolm, head of foreign exchange strategy at UBS, told Insider on Monday the collaborative spirit that has been so prevalent in the cryptocurrency market is giving way to an "every man for himself" attitude, which is likely to sow further trouble.

Bitcoin crashed below the key $20,000 threshold over the weekend, plunging as low as $17,660, according to Bloomberg prices. The world's biggest cryptocurrency recovered ground on Sunday and Monday, and was up slightly to around $20,620 as of 5.50 a.m. ET.

Cryptocurrencies have tumbled along with tech stocks, as investors dump investments seen as risky as the Federal Reserve hikes interest rates hard and the global economy slows.

The $20,000 price is important to many investors because bitcoin topped that level in 2017. A drop to below levels seen five years ago represents a major blow to the thesis that bitcoin is on a solidly upwards path as more people become interested.

"We've obviously been breaking big-figure levels and that's been pretty critical. Sentiment sours the further down we go," Malcolm said.

He said the recent turbulence at investment firms such as Celsius and Three Arrows Capital were a sign of the high levels of stress in the market.

Celsius blocked withdrawals last week, and the Financial Times has reported that Three Arrows failed to meet demands by its lenders to stump up more cash to cover potential losses last week.

"There's this narrative out there that crypto is extremely collaborative in comparison with trad-fi," Malcolm said, referring to traditional finance. "And one of the things that's become very apparent is that it's sort of every man for himself now."

He said the outlook for bitcoin and other tokens was quite gloomy, although he said a stabilization in broader financial markets could bring about some calm in crypto.

"It's difficult to think that we're outta the woods for a whole lot of reasons," Malcolm said. "The regulatory element, which is going to be the biggest hurdle for crypto, has yet to bite in any significant shape or form."

He said weekends would continue to be difficult as low trading volumes leads to bigger price swings. "There are a whole lot of things which suggest that prices can stay soft," he said.