Bitcoin It plummeted to about $ 17,749, ether Selling on the crypto market accelerated, it fell to about $ 897 around 4:15 pm on Saturday. The two most popular cryptocurrencies in the world have both broke symbolic price barriers and have fallen by more than 35% in the past week.
Bitcoin bounced back to about $ 18,500 and ether was trading at about $ 936 by 5:30 pm ET.
The crypto market genocide is spiral inflation and A series of Fed rate hikes.. We’ve also seen these good stocks track stocks lower.It doesn’t help Cryptocurrency companies are firing large numbers of employeesAnd some of the most popular names in the industry Faced with a solvency meltdown..
Bitcoin peaked at $ 68,789.63 in November. Ether peaked at $ 4,891.70 in the same month. Bitcoin was last traded at this low price around December 2020.
This is how we got here.
Alex Mashinsky, CEO of Celsius.
PiarasÓ Mídheach | Web Summit Sportsfile | Getty Images
The week began with crypto prices plummeting and Bitcoin dropping 17% at some point in the day. It looked like the crypto winter was here.
In the turmoil, Celsius, a major cryptocurrency staking and lending company, entered the market when it announced that all withdrawals, swaps and transfers between accounts were suspended due to “extreme market conditions”. I was shocked. In a memo The platform also said to the Celsius community that the move was aimed at “stabilizing liquidity and operations.”
Celsius was effectively trapped Its $ 12 billion crypto assets under control, Raises concerns about the solvency of the platform. The news spread throughout the crypto industry, reminding us of some of what happened in May. The failed US $ Peg stablecoin project lost $ 60 billion in value And that dragged the wider crypto industry.
Celsius tells the user Up to 18.63% To their deposit. It’s like a product offered by a bank, except that there are no regulatory safeguards.
Those crazy high yields were the ones that were finally scrutinized.
“This risk certainly seems to be just the beginning.” John Todalo saidVice President of Cryptocurrency and Blockchain Research at Needam.
“I’m on the decentralized side. Many of these DeFi protocols are over-collateralized, which often leads to potential shortages of funds for centralized borrowers and lenders. You don’t have to look, you could still see a lot of liquidations as the collateral was sold off with the DeFi protocol, “continued Todaro.
People are seeing the logo of Coinbase Global Inc, the largest cryptocurrency exchange in the United States, appearing on April 14, 2021 at the Nasdaq Market Site Jumbotron in Times Square, New York, USA.
Shannon Stapleton | Reuters
The crypto market on Tuesday seems to be stable, with Bitcoin at around $ 22,000 and ether at around $ 1,100.
Investors were appreciating Celsius’ fallout, and in the meantime, another crypto company joined the growing list of companies cutting staff to support their profits.
“I think the recent inflation reports have surprised a lot of people,” explained Emily Choi, President and Chief Operating Officer.
“We asked Jamie Dimon and others to talk about the upcoming economic hurricane, so it feels like the wisest thing to do now, given what’s happening in the economy,” Choi continued.
Cryptocurrency companies are looking for ways to reduce costs overall, as investors rotate from the riskiest assets to reduce transaction volumes.
Michael Saylor, Chairman and Chief Executive Officer of MicroStrategy, first entered Bitcoin in 2020 when it decided to start adding cryptocurrencies to MicroStrategy’s balance sheet as part of its unorthodox financial management strategy. ..
Eva Marie Uzcategi | Bloomberg | Getty Images
MicroStrategy CEO Michael Saylor appeared on CNBC Wednesday morning to discuss concerns about his company. $ 4 billion bet on Bitcoin..Sailor said The company is also the first and only Bitcoin Spot Exchange Traded Fund in the United States.Therefore, investing in MicroStrategy is the closest thing to a Bitcoin Spot ETF.
MicroStrategy used company debt to buy BitcoinAnd in March, Sailor decided to take a new step towards the normalization of Bitcoin-backed finance. Borrowed $ 205 million with his Bitcoin as collateral — Then buy more cryptocurrencies.
“We have $ 5 billion in collateral. We borrowed $ 200 million. So I’m not telling people to go out and borrow a highly leveraged loan. Backed by Bitcoin. Leveraged financial industry ” Sailor saidWho added that listed crypto miner Marathon Digital Also I took a credit line with Silvergate Bank..
Investors were worried that Bitcoin’s price soared this week would require the company to increase collateral for loans, but Sailor said the concern was exaggerated.
“Margin calls are fine” Sailor told CNBC earlier this week.. “I’m grateful that I’ve just become famous on Twitter … I feel comfortable with the fortress’s balance sheet and the margin loan is well managed.”
Then on Wednesday afternoon Federal Reserve raises benchmark interest rate by three-quarters percentage point With the most aggressive hikes since 1994. The Fed said the move was made to curb high inflation in the sky.
Cryptographic prices initially rose in the news as investors wanted to avoid the recession, but the rise was short-lived.
Bitcoin and other cryptocurrencies are in free fall.
Dunkit Wood | Getty Images
We returned to the deficit on Thursday. Bitcoin has fallen to about $ 20,000, to a price not seen since the end of 2020.
Losses are closely linked to Wall Street sales, with the Dow dropping 700 points to its lowest level in over a year.
Investors seem unable to shake the fear of a recession, and some say cryptocurrencies may take longer to recover from the sale of higher-risk assets.
“I think we have a long drawdown period here,” said Jill Gunter, co-founder and chief strategy officer of Espresso Systems. Talked to CNBC’s Squawk on the Street..
“I think we took the elevator down. I think the industry needs to climb the stairs by building real utilities,” she said.
Gunter said in many respects that what we are seeing is a “healthy washout.”
“As a builder, as a long-term investor … short-term price behavior, speculation, honestly, I don’t want to be in a market driven by cryptocurrencies. I have. “
Bitcoin and other cryptocurrencies have fallen sharply as investors dumped their risk assets. A cryptocurrency lender called Celsius has suspended customer withdrawals, raising the threat of spillover to the wider market.
Nurphoto | Nurphoto | Getty Images
The crypto market genocide shows no signs of slowing as Bitcoin and Ether continue to sell in a rapid clip on Saturday afternoon.
This happens because crypto hedge funds and businesses are facing growing questions about bankruptcy.
“This opaque leverage has made our finances unstable. We didn’t know where all these risks were accumulating,” said Charles Cascarilla, CEO and co-founder of Paxos. Told CNBC..
“In a sense, this is an old-fashioned story. You borrow short and lend long. And I’m really sorry that people lost money. And in a sense, you have space. I think we’re going to set back. We’ll lose some early adopters and some newcomers to the field, “continues Cascarilla.
However, Cascarilla also states that investors are still looking for quality crypto investments.
“The basic technology here and the hiring curves we see, the institutions that come in, how to operate the financial system at the speed of the internet, that’s what needs to happen,” he said.