Bitcoin, the world’s largest cryptocurrency, traded just below the symbolic level of $ 20,000 in the early hours of trading in London.
Bitcoin fell to $ 17,592.78 on Saturday, falling below $ 20,000 for the first time since December 2020. It lost almost 60% of its value this year and 37% this month alone in the latest collapse of the cryptocurrency sector.
Its decline is due to problems in several major players in the industry. Further declines, market players said, could have the opposite effect, as other crypto investors are forced to sell their assets to meet margin demands and cover losses.
Crypto hedge fund Three Arrows Capital is exploring options, including selling assets and rescuing another company, its founders told the Wall Street Journal in an article published Friday, targeting Asia crypto lender Babel Finance, which said it would suspend withdrawals.
Crypto lender Celsius Network said this month that it would suspend customer withdrawals. In a blog post Monday, Celsius said it would continue to work with regulators and employees, but would pause its customer question and answer sessions. Celius also said it would “take time” to stabilize its liquidity and operations.
“There are a lot of loans being withdrawn from the system, and if lenders have to take losses in Celsius and Three Arrows, they will reduce the size of their future credit books, which means that the total amount of credit available in the crypto ecosystem is greatly reduced. “Said Adam Farting, Japan’s chief risk officer at B2C2, a cryptocurrency provider.
“It’s very similar to 2008 in terms of how the domino effect of bankruptcies and liquidations can have an effect,” Farting said.
Smaller tokens, which usually run in tandem with bitcoin, were also injured. Token Ether № 2 was at $ 1.0752, falling below its own symbolic level of $ 1,000 over the weekend.
The decline in crypto markets coincided with a decline in stocks, as US stocks suffered their biggest weekly percentage decline in two years due to fears of rising interest rates and the growing likelihood of a recession.
Bitcoin movements tend to follow a similar pattern to other risky assets such as technology stocks.
The total crypto market capitalization is approximately $ 877 billion, according to price tag Coinmarketcap, down from a $ 2.9 trillion peak in November 2021.
Decreasing stable coins – a type of cryptocurrency designed to maintain stable value – also suggests that investors are withdrawing money from the sector as a whole.