The cryptocurrency industry was teetering on the brink on Monday, with bitcoin struggling to stay above a key level and investors fearing troubles in major cryptocurrency players could trigger a broader shakeout in the market.
Bitcoin, the world’s largest cryptocurrency, was trading just below the symbolic $20,000 level in early London trading.
Bitcoin fell on Saturday to $17,592.78, going below $20,000 for the first time since December 2020. It has lost nearly 60% of its value this year and 37% this month alone in the latest cryptocurrency industry meltdown. .
The drop follows problems at several major players in the industry. Further declines, market participants said, could have a knock-on effect as other cryptocurrency investors are forced to sell their holdings to meet margin calls and cover losses.
the background of crypto hedge Three Arrows Capital is exploring options, including the sale of assets and a bailout by another company, the founders told Wall Street Journal in an article published last Friday, the same day that Asia-focused cryptocurrency bank Babel Finance said it would suspend withdrawals.
Cryptocurrency lender Celsius Network said this month that it would suspend customer withdrawals.
In a blog post on Monday, Celsius said it would continue to work with regulators and authorities, but would pause its question-and-answer sessions with customers.
Celius also said that stabilizing liquidity and operations “will take time”.
“There is a lot of credit being taken out of the system and if lenders have to absorb losses from Celsius and Three Arrows, they will downsize their future loan books, which means the entire amount of credit available in the cryptocurrency ecosystem is much larger. reduced,” said Adam Farthing, chief risk officer for Japan at crypto liquidity provider B2C2.
“It feels very 2008 to me in terms of how there can be a domino effect of bankruptcies and liquidations,” Farthing said.
Smaller tokens, which often move in tandem with bitcoin, were also hurt.
The #2 Ether token was at $1.0752, having dropped below its own symbolic level of $1,000 over the weekend.
The drop in cryptocurrencies coincided with a drop in equities as the US market suffered its biggest weekly percentage decline in two years on fears of rising interest rates and the growing likelihood of recession.
Bitcoin’s movements tend to follow a similar pattern to other risky assets such as tech stocks.
The overall cryptocurrency market capitalization is approximately $877 billion, according to pricing website Coinmarketcap, down from a peak of $2.9 trillion in November 2021.
A drop in stablecoins — a type of cryptocurrency designed to maintain a stable value — also suggests that investors are taking money out of the sector as a whole.
Source: CNN Brasil
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