The price of bitcoin is falling below $ 18,200 as the sale accelerates

bitcoin fell to $ 18,113 and ether fell to $ 918 on Saturday afternoon as crypto market sales accelerated. The world’s two most popular cryptocurrencies have fallen more than 35 percent in the past week as both violate symbolic price barriers.

The carnage of the crypto market is partly related to the pressure of macroeconomic forces, including spiraling inflation and sequence of Fed interest rate hikes. We have also seen that these blue-chip cryptocurrencies are following lower stocks. That doesn’t help crypto companies are laying off large numbers of employeesand some of the most popular names in the industry are facing a collapse in solvency.

Here’s how we got here.

Monday

Celsius CEO Alex Maszynski.

Piaras and Midheach Sportsfile for Web Summit Getty Images

The week began with a sharp drop in cryptocurrency prices and a fall in bitcoin by as much as 17% at one point in the day. Crypto seemed to be here in the winter.

In the chaos, Celsius, a large 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 intended to “stabilize liquidity and operations”.

Celsius is effectively concluded its $ 12 billion in crypto assets under management, which raises concerns about the solvency of the platform. The news covered the crypto industry, recalling some of what happened in May when a the failed US $ 10 billion stablecoin project lost $ 60 billion and dragged the wider crypto industry down with it.

Celsius has been known to offer consumers a return on up to 18.63% on their deposits. It is like a product that the bank would offer, except without any of the regulatory guarantees.

These crazy high yields were ultimately tested.

“This risk definitely seems to be just the beginning,” said John Todarovice president of Needham for crypto assets and blockchain research.

“What I would say is from the decentralized side – many of these DeFi protocols, many of these positions are oversecured, so you should not see the underfunding situation that can happen to centralized borrowers and creditors. But with that in mind, you can still see a lot of liquidation with this collateral, which is being sold off according to DeFi protocols, “Todaro continued.

Tuesday

People watch the Coinbase Global Inc logo, the largest cryptocurrency exchange in the United States, appear on the Nasdaq MarketSite jumbotron in Times Square, New York, USA, April 14, 2021.

Shannon Stapleton Reuters

Crypto markets seem to have stabilized on Tuesday, with bitcoin hovering around $ 22,000 and ether around $ 1,100.

Investors appreciated the fall in Celsius, and another crypto company, meanwhile, has joined a growing list of layoffs to try to bolster profits.

Coinbase announced that it is cuts almost one-fifth of its workforce due to crypto volatility. Earlier, the company cut costs and even canceled job offers in hopes of stabilizing its business.

“We had a recent report on inflation that came out, which I think surprised many people,” said President and Chief Operating Officer Emily Choi.

“We’ve made Jamie Dimon and others talk about an impending economic hurricane, and so given what’s going on in the economy, that’s the most sensible thing to do right now,” Choi said.

Crypto companies everywhere are looking for ways to reduce costs as investors return from the most risky assets, reducing trading volumes.

Crypto.com soon announced staff cuts of 260 peopleas well as the Twins, who said it would happen cut 10% of its workforce – for the first time for the US-based cryptocurrency exchange and custodian.

Wednesday

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

Eva Marie Uscategi Bloomberg | Getty Images

Micro strategy CEO Michael Sailor appeared on CNBC on Wednesday morning to discuss concerns about his firm, which made Bet $ 4 billion on bitcoin. Sailor said that the company doubles as the first and only spot-traded bitcoin fund in the United Statesso investing in MicroStrategy is the closest thing to a bitcoin spot ETF.

MicroStrategy uses the company’s debt to buy bitcoinsand in March, Sailor decided to take another step toward normalizing bitcoin-funded finances when he borrowed $ 205 million using its bitcoins as collateral – to buy more than the cryptocurrency.

“We have $ 5 billion in collateral. We took $ 200 million. So I’m not telling people to go out and take out a big leverage loan. What I’m doing, I think I’m doing my best to lead and normalize the funded bitcoin industry. ” said Sailorwho added that the publicly traded crypto miner Digital marathon too draw a credit line with Silvergate Bank.

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

“Margin car is a lot of noise for nothing,” Sailor told CNBC earlier this week. “It just made me famous on Twitter, so I appreciate it … We feel like we have a balance of the fortress, we’re comfortable and the margin loan is well managed.”

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

Initially, cryptocurrency prices rose because of the 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

On Thursday we were red again. Bitcoin has fallen to about $ 20,000, to prices it has not seen since the end of 2020.

The losses were closely linked to the Wall Street sell-off, in which the Dow fell 700 points to its lowest level in more than a year.

Investors do not seem to be able to shake off fears of a recession, and some say it may take time for cryptocurrencies to recover from the sale of riskier assets.

“I think we’re in a long period of decline here,” said Jill Gunter, co-founder of Espresso Systems and chief strategic officer. told CNBC’s Squawk on the Street.

“I think we’ve taken the elevator down and I think we, as an industry, are going to have to go back up the stairs and go up, building real utility,” she said.

Gunther said that in many ways what we see is “healthy washing.”

“One does not want as a builder, as a long-term investor … to be in a market where it is driven only by short-term price actions, by speculation, as, let’s be honest, the crypto market has been largely the last few years.” Gunther continued.

Friday to Saturday

Bitcoin and other cryptocurrencies have fallen sharply as investors dump risky assets. A cryptocurrency company called Celsius is pausing withdrawals for its customers, fearing infection in the wider market.

Nurfoto | Nurfoto | Getty Images

The carnage of crypto markets shows no signs of slowing down, as bitcoin and ether continue their sales with a quick clip on Saturday afternoon.

This comes as crypto hedge funds and businesses face growing insolvency issues.

“We’ve had financial instability because of this opaque leverage, you just can’t figure out where all these risks are,” said Paxos CEO and co-founder Charles Cascarilla. he told CNBC.

“In a sense, this is just a century-old story. You take short loans and give long loans. And I think it’s really unfortunate that people have lost money, and I think that’s going to reduce the space in some way, because you’re going to lose some early adopters or some of the people who just came into space, “Cascarilla said.

But Cascarilla also says investors are still looking for quality crypto investments.

“The fundamental technology here and the acceptance curve that we see, the institutions that are coming, how you can make your financial system work at the speed of the Internet, these are things that need to happen,” he said.

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