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The value of bitcoin falls below $ 17,800 as sales accelerate

As of 4:15 ET on Saturday afternoon, when sales in the crypto market are accelerating, bitcoin has fallen to $ 17,749 and ether has fallen to $ 897. The world’s two most popular cryptocurrencies have fallen more than 35% over the past week as both violate symbolic price barriers.

In November, bitcoin reached a high of $ 68,789.63, and last traded at that low around November 2020.

The massacre in the crypto market is partly caused by pressure from macroeconomic forces, including spiraling inflation and the Fed’s consistent rate hike. We’ve also seen these blue crypto chips track the stocks below. It doesn’t help that crypto firms are laying off large numbers of employees, and some of the most popular names in the industry are facing declining solvency.

That’s how we got here.

Monday

Celsius CEO Alexei Maszynski.

Piaras Ó Mídheach – Sportsfile for Web Summit Getty Images

The week began with a sharp drop in crypto prices, and at one point in the day bitcoin fell 17%. It seemed that the crypt of winter was here.

In the chaos, Celsius, a major cryptocurrency betting and lending company, shocked the market when it announced that all withdrawals, exchanges and transfers between accounts had 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 has effectively blocked its crypto assets for $ 12 billion under management, raising concerns about the platform’s solvency. The news flew around the crypto industry, recalling some of what happened in May, when a failed stalkcoin project pegged to the US dollar lost $ 60 billion in value and led to a widespread crypto industry.

Celsius was known for offering users a yield of up to 18.63% on their deposits. It’s like a product that a bank can offer except for the lack of regulatory guarantees.

These insanely high yields were something that eventually came under close scrutiny.

“This risk, of course, seems like it’s just the beginning,” said John Todara, Needham’s vice president of crypto-assets and blockchain research.

“I would say that on the decentralized side – many of these DeFi protocols, many of these positions are too secured, so you should not see a situation of underfunding that can happen to centralized borrowers and lenders. , you could still see a lot of liquidations with this pledge sold out under DeFi protocols, ”Todara continued.

Tuesday

People watch as the logo of Coinbase Global Inc, the largest cryptocurrency exchange in the U.S., is displayed at the Nasdaq MarketSite jumbo at Times Square in New York City, USA, on April 14, 2021.

Shannon Stapleton | Reuters

Wednesday

Michael Sailor, chairman and CEO of MicroStrategy, first hit Bitcoin in 2020 when he decided to start adding cryptocurrency to MicroStrategy’s balance sheet as part of an unusual treasury management strategy.

Eva Marie Uscotegi Bloomberg | Getty Images

MicroStrategy CEO Michael Sailor appeared on CNBC on Wednesday morning to discuss issues around his firm, which has bet $ 4 billion on bitcoin. Sailor said the company is the first and only exchange-traded fund to trade on a spot exchange in the U.S., so investing in MicroStrategy is the closest thing to a bitcoin spot ETF.

MicroStrategy used the company’s debt to buy bitcoins, and in March Sailor decided to take another step toward normalizing Bitcoin-funded funding by borrowing $ 205 million using his bitcoin as collateral – to then buy more cryptocurrencies.

“We have $ 5 billion in collateral. We’ve borrowed $ 200 million. So I’m not telling people to go out and take out a high-credit loan. I believe I’m doing my best to become a leader and normalize the situation.” the bitcoin-funded industry, ”said Sailor, who added that public crypto miner Marathon Digital also took a credit line at Silvergate Bank.

As bitcoin prices fell this week, investors worried the company would be asked to provide more collateral on the loan, but Sailor said fears were exaggerated.

“The margin call is a lot of noise,” Sailor told CNBC earlier this week. “It just made me famous on Twitter, so I appreciate it … We feel we have a fortress balance, we’re comfortable, and the margin loan is well managed.”

Then on Wednesday afternoon, the Federal Reserve raised key interest rates by three-quarters of a percentage point in the most aggressive increase since 1994. The Fed said the move was made in an attempt to curb sky-high inflation.

Cryptocurrency prices initially rose on this news as investors hoped we could avoid a recession, but this rally was short-lived.

Thursday

Bitcoin and other cryptocurrencies are in free fall.

Dan Kitwood Getty Images

Friday to Saturday

Bitcoin and other cryptocurrencies have fallen sharply as investors dump risky assets. A crypto lending company called Celsius has stopped withdrawing funds for its customers, raising fears of infection in the wider market.

Nurfota | Nurfota | Getty Images

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The value of bitcoin falls below $ 17,800 as sales accelerate

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