Bitcoin fell below the psychologically important $20,000 ($29,000) threshold for the first time since late 2020, another sign that the sell-off in cryptocurrencies is deepening.
Most important points:
- The cryptocurrency industry has seen turmoil amid wider financial market turbulence
- Bitcoin hit a record high of $69,000
- The total market value of cryptocurrency assets has fallen from $3 trillion dollars to less than $1 trillion dollars
The price of the most popular cryptocurrency had fallen a whopping 12 percent to less than $18,100 by late afternoon on the East Coast, according to cryptocurrency news site CoinDesk.
It was November 2020 when bitcoin was last at that level, as it headed to an all-time high of nearly $69,000, according to CoinDesk.
Many in the industry thought it wouldn’t go below $20,000.
Bitcoin has now lost more than 70 percent of its value since it peaked.
Cryptocurrencies Diving
Ethereum, another widely followed cryptocurrency that has been shifting in recent weeks, made a similar fall on Saturday.
The cryptocurrency industry has seen turmoil amid wider turbulence in the financial markets.
Investors are selling riskier assets as central banks raise interest rates to combat rising inflation.
The total market value of cryptocurrency assets has fallen from $3 trillion dollars to less than $1 trillion dollars, according to coinmarketcap.com, which tracks crypto prices.
On Saturday, the company’s data showed that the global market value of crypto was about $834 billion.
A spate of cryptocurrency meltdowns has sparked urgent calls to regulate the freewheeling industry, and bipartisan legislation was introduced last week in the US Senate to regulate digital assets.
The industry has also stepped up its lobbying efforts — pouring $20 million into congressional races for the first time this year, according to data and interviews.
Cesare Fracassi — a finance professor at the University of Texas at Austin who leads the school’s Blockchain Initiative — says bitcoin’s fall below the psychological threshold isn’t an issue.
Instead, he said, the focus should be on recent news from lending platforms.
One of them, Celsius Network, said this month it was pausing all withdrawals and transfers, with no idea when it would give its 1.7 million customers access to their funds.
Another platform, Babel Finance, said in a statement posted online Friday that it would suspend product purchases and withdrawals due to “unusual liquidity pressures”.
“There is a lot of turbulence in the market,” Fracassi said. “And the reason prices are falling is because there’s a lot of concern that the industry is over-leveraged.”
Cryptocurrency exchange platform Coinbase announced Tuesday it had laid off about 18 percent of its workforce, with co-founder and chief executive Brian Armstrong putting some of the blame on a coming “crypto winter”.
Stablecoin Terra imploded last month, losing tens of billions of dollars in value within hours.
Crypto had permeated much of popular culture before its recent downfall, with Super Bowl ads touting the digital asset, while celebrities and YouTube personalities routinely promoted it on social media.
David Gerard — a crypto critic and author of Attack of the 50 Foot Blockchain — said the recent meltdowns demonstrated a failure of regulators, who, he said, should have put more scrutiny on the industry years ago.
Many fledgling investors — especially young people — invested on the basis of false hopes being sold to them, he said.
AP
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