The Bitcoin price fell below $ 17,800 as sales accelerated
Bitcoin plunged to around $ 17,749 and ether fell to around $ 897 around 4:15 ET on Saturday afternoon as sales in the crypto market accelerate. The world’s two most popular cryptocurrencies have fallen more than 35% in the last week, as both break symbolic price barriers.
Bitcoin bounced back to around $ 18,955 and ether traded at around $ 995 just after noon. 20 ET.
The carnage in the crypto market is partly caused by pressure from macroeconomic forces, including spiral inflation and a series of interest rate hikes in the Fed. We have also seen these blue chip cryptocurrencies track stocks lower. It does not help that crypto companies lay off large numbers of employees, and some of the most popular names in the industry are facing solvency breakdowns.
Bitcoin peaked at $ 68,789.63 in November. Ether peaked at $ 4,891.70 the same month. Bitcoin last traded so low around December 2020.
Here’s how we got here.
Monday
Celsius boss Alex Mashinsky.
Piaras Ó Mídheach | Sports file for Web Summit | Getty pictures
The week started with cryptocurrency prices plummeting, and bitcoin falling as much as 17% at some point in the day. It seemed like the crypto winter was here.
In the chaos, Celsius, a large crypto-investment and lending company, shocked the market when it announced that all withdrawals, exchanges and transfers between accounts have been suspended due to “extreme market conditions.” In a note addressed to the Celsius Community, the platform also said the move was designed to “stabilize liquidity and operations.”
Celsius effectively locked its $ 12 billion in cryptocurrencies under management, raising concerns about the platform’s solvency. The news swept over the crypto industry, and was somewhat reminiscent of what happened in May, when a failed US dollar-denominated stackecoin project lost $ 60 billion in value and dragged the broader crypto industry down.
Celsius was known for offering users a return of up to 18.63% on their deposits. It is like a product a bank would offer, except with none of the regulatory safeguards.
These insanely high returns were what were finally examined.
“This risk certainly seems to be just the beginning,” said John Todaro, Needham’s vice president of cryptocurrency and blockchain research.
“What I mean is on the decentralized side – many of these DeFi protocols, many of these positions are overcrowded, so you should not quite see the underfunding situation that can happen with centralized borrowers and lenders. But that said, you could still see that many liquidations with that security were sold on DeFi protocols, “Todaro continued.
Tuesday
People are watching as the logo of Coinbase Global Inc, the largest US cryptocurrency exchange, appears on the Nasdaq MarketSite jumbotron on Times Square in New York, USA, April 14, 2021.
Shannon Stapleton | Reuters
The crypto markets appeared to stabilize on Tuesday, with bitcoin hovering around $ 22,000 and ether at around $ 1,100.
Investors are considering the collapse of Celsius, and in the meantime another crypto company has joined a growing list of companies that cut employees to try to make a profit.
“We had the recent Inflation Report which I think surprised many,” explained President and Chief Operating Officer Emilie Choi.
“We’ve had Jamie Dimon and others talking about an upcoming economic hurricane, and then given what’s going on in the economy, it feels like the most sensible thing to do right now,” Choi continued.
Cryptocompanies across the board are looking for ways to cut costs, as investors rotate out of the most risky assets, pulling down trading volumes.
Crypto.com recently announced a staff reduction of 260 peopleso did Gemini, who said it would lay off 10% of its workforce – a first time for the US-based cryptocurrency exchange and custodian.
Wednesday
Michael Saylor, chairman of the board and CEO of MicroStrategy, first started using bitcoin in 2020, when he decided to start adding the cryptocurrency to MicroStrategy’s balance sheet as part of an unorthodox financial management strategy.
Eva Marie Uzcategui | Bloomberg | Getty pictures
MicroStrategy has used the company’s debt to buy bitcoin, and in March Saylor decided to take a new step towards normalizing bitcoin-backed finance when he borrowed $ 205 million using his bitcoin as collateral – and then bought more of the cryptocurrency. .
“We have $ 5 billion in collateral. We borrowed $ 200 million. So I’m not asking people to go out and take out a high-loan loan. What I do do I think is do my best to go ahead and normalize the bitcoin-backed finance industry , “said Saylor, who added that the listed crypto miner Marathon Digital also raised a credit line with Silvergate Bank.
As bitcoin prices fell this week, investors were worried that the company would be asked to provide more collateral for the loan, but Saylor said fears were exaggerated.
“Margin call is a lot of fuss about nothing,” Saylor told CNBC earlier this week. “It has just made me famous on Twitter, so I appreciate it … We feel we have a fortress balance, we are comfortable and the margin loan is well managed.”
So on Wednesday afternoon, the Federal Reserve raised its reference rates by three quarters of a percentage point in its most aggressive increase since 1994. The Fed said the move was made in an attempt to curb soaring inflation.
Crypto prices first rose in the news when investors hoped we could avoid a recession, but that rise was short-lived.
Thursday
Bitcoin and and other cryptocurrencies are in free fall.
Dan Kitwood | Getty pictures
We were back in minus Thursday. Bitcoin fell to around $ 20,000, at prices it had not seen since the end of 2020.
The losses were closely linked to a sale on Wall Street, where the Dow fell 700 points to its lowest level in more than a year.
It seems that investors can not shake the fear of recession, and some say that it may take time for cryptocurrencies to recover after the sale of more risky assets.
“I think we’re in a long period of downsizing here,” said Jill Gunter, co-founder and CEO of Espresso Systems. told CNBCs Squawk on the Street.
“I think we have taken the elevator down, and I think we as an industry need to take the stairs up again and climb out by building real utility,” she said.
Gunter said that what we see in many ways is a “healthy washout”.
“One does not want, as a developer, as a long-term investor … to be in a market where it is driven by only short-term price action, by speculation, which, let’s be honest, the crypto market has largely been the last couple of years,” Gunter continued.
Friday to Saturday
Bitcoin and other cryptocurrencies fell sharply as investors dumped risk assets. A crypto loan company called Celsius stops withdrawals for its customers, which raises fears of contagion to the wider market.
Nurphoto | Nurphoto | Getty pictures
Carnage in the crypto markets shows no signs of slowing, as bitcoin and ether continue sales with a quick cut on Saturday afternoon.
This comes as crypto hedge funds and companies face increasing questions about insolvency.
“We had financial instability because of this opaque influence, you just could not see where all these risks were built up,” said Paxos CEO and co-founder Charles Cascarilla. told CNBC.
“In some ways this is just an ancient story. You borrow short and lend long. And I think it’s very unfortunate that people lost money, and I think in some ways it will put back space, because you want to lose some early users. or some of the people who had just entered the room, Cascarilla continued.
But Cascarilla also says investors are still looking for quality crypto investments.
“The basic technology here and the adoption curve that we see, the institutions that come in, how you can make the financial system work at the speed of the internet, there are things that need to happen,” he said.
