Cryptocurrency investors and CEOs are bracing for more pain after the price of Bitcoin plunged over the weekend, exacerbating the credit crunch that has hit the industry.
BitcoinThe world’s most traded cryptocurrency dropped to $17,628 on Saturday before rebounding, according to data from CryptoCompare.
Investors and executives have been watching the price of the token with apprehension. Drop below $20,000 May result in forced liquidation of high leveraged bets.
Bitcoin, which serves as a major public standard Cryptocurrency The market has been under severe pressure in recent months as central banks and governments have shifted from a long period of ultra-low interest rates to combating rising inflation.
“This is a bleak winter for cryptocurrency as the era of free money ends with another brutal sell-off this weekend. All risk assets are being taken out of the window,” said Dan Ives, managing director and chief equity analyst at Wedbush Securities.
The search for returns has shifted as the major central banks, led by the US Federal Reserve, Increased borrowing costs and ending pandemic-era efforts to spur economic growth.
Conventional financial markets have been shaken this month as traders worry that aggressive measures could stymie global growth or even lead to a recession. last week was The worst for global stocks Since the darkest days of the pandemic in March 2020.
Bitcoin is down about 70 percent from an all-time high of nearly $70,000 last November to just over $20,000 as of Sunday afternoon ET. Ether, another actively traded coin, dropped to $900 over the weekend, meaning its price has fallen by four-fifths since its peak late last year.
This has contributed to the escalation of the credit crunch in the digital asset industry that threatens to engulf many of its major players.
in the last month, The so-called tera stable coin Its token sister Luna — popular with cryptocurrency traders seeking ultra-high returns — has collapsed, two lending platforms have prevented depositors from withdrawing their assets, and crypto hedge fund Three Arrows has failed to meet margin calls in the wake of lenders’ demands.
The weekend selloff prompted the liquidation of more than $600 million of leveraged positions, according to data from Coinglass, as traders who borrowed money to take supercharged market bets failed to post more collateral and were wiped out.
Analysts expect that these losses will put more pressure on the balance sheets of traders and lenders, as many users have taken out loans against their holdings of crypto assets.
However, cryptocurrency dogecoin surged after Elon Musk, CEO of electric car maker Tesla, tweeted about his continued support for the token.
Nayib Bukele, president of El Salvador and one of the Bitcoin champions, told investors on Sunday to “stop looking at the charts and enjoy life.” Bukele, who in El Salvador led the adoption of bitcoin as legal tender last year, has Rejecting warnings from the International Monetary Fund on politics.
Problems in the cryptocurrency market are back in the mainstream financial market corners. US-listed MicroStrategy, a technology group that is a major investor in bitcoin, has fallen nearly 70 percent this year. Shares in crypto miners, who earn fees for validating crypto transactions, have also fallen sharply.
Cryptocurrency exchanges – platforms that stand head-on in the face of an unrelenting market crash – have been forced to reverse hiring plans. The list includes Coinbase, Gemini, Mercado Bitcoin – a popular South American exchange – and rival lender Celsius, BlockFi, which cut 20 percent of staff this month.
Additional reporting by Adam Samson in Milan
