Bitcoin drops below $ 18,300 when the sell-off accelerates – here’s what happened

Bitcoin sank at 18,248, and Ether dropped to $ 944 in mid-Saturday, sharply selling-off in the crypto market. The world’s two most popular cryptocurrencies have fallen more than 35% in the past week, as both break symbolic price barriers.

The genocide in the crypto market is partly due to pressure from macroeconomic powers, including rising inflation and a succession of Fed rate hikes. We have also seen less of these blue chip crypto track equities. It doesn’t help that crypto firms are leaving large numbers of employees, and some of the most popular names in the industry are facing solvency meltdown.

Here’s how we got here.

The beginning of the week saw crypto prices fall, and Bitcoin fell by 17% at one point of the day. It looks like Crypto Winter is here.

In the chaos, Celsius, a leading crypto stacking and lending firm, shocked the market when it announced that all withdrawals, swaps and transfers between accounts had stopped due to “extreme market conditions”. In a memo addressed to the Celsius community, the platform said the move was designed to “stabilize liquidity and operations.”

Celsius effectively locked under its $ 12 billion crypto asset management, raising concerns about the platform’s solution. The news sent ripples through the crypto industry, recalling what happened in May, when the failed US dollar-pagged stablecoin project lost मूल्य 60 billion in value and dragged down the wider crypto industry.

Celsius was known to offer users up to 18.63% yield on their deposits. This is like any product offered by any bank except regulatory protection.

Those crazy high yields finally came under scrutiny.

“This risk certainly looks like the beginning,” said John Todaro, vice president of cryptocurrency and blockchain research at Needham.

“What I want to say is that on the decentralized side – there are a lot of DeFi protocols, a lot of places are collateral, so you shouldn’t see the underfunding situation with centralized borrowers and lenders. You can, “Todaro continued.

Crypto markets appear to have stabilized on Tuesday, with Bitcoin hovering around $ 22,000 and Ether hovering around $ 1,100.

Investors were evaluating the Celsius result, and meanwhile, another crypto firm joined the growing list of companies cutting staff in an effort to boost profits.

Coinbase has announced that it has dropped about one-fifth of its workforce due to crypto instability. The company had earlier cut costs in the hope of stabilizing its business and rejected a job offer.

“We’ve just got an inflation report that I think surprised a lot of people,” said Emily Choi, president and chief operating officer.

“We’ve talked to Jamie Dimon and others about the impending economic storm and given what is happening in the economy, it seems like the most sensible thing to do right now,” Choi continued.

Across the board, crypto companies are looking for ways to cut costs, as investors move out of risky assets, reducing the volume of trades.

Crypto.com recently It has announced to cut 260 employeesAs Gemini did, he said it would remove 10% of its workforce – the first for US-based cryptocurrency exchanges and patrons.

MicroStrategy CEO Michael Saylor appeared on CNBC on Wednesday morning to discuss concerns surrounding his firm, which has placed a $ 4 billion bet on Bitcoin. Saylor said the company has doubled as the first and only Bitcoin spot exchange traded fund in the United States, so when investing in microstrategies you will find Bitcoin spot ETFs.

Microstrategy has used the company’s debt to buy Bitcoin, and in March, Seller decided to take another step toward normalizing Bitcoin-backed finance when it borrowed $ 205 million using its Bitcoin collateral – then to buy more cryptocurrency.

“We have ५ 5 billion in bail. We borrowed डलर 200 million. So I’m not telling people to go out and take out high leverage loans. What I’m doing is, I think, doing my best to lead the way and normalize the bitcoin-backed financial industry, “said Cellar, who also said the publicly traded crypto minor Marathon Digital also has a credit line with Silvergate Bank.

As the value of Bitcoin plummeted this week, investors were worried that the company would be asked to keep more collateral for its debt, but Seller said fears were allayed.

“Margin calls are a lot of things,” Seller told CNBC earlier this week. “It just made me Twitter famous, so I appreciate it … We feel like we have a strong balance sheet, we’re comfortable, and the margin debt is well organized.”

Then on Wednesday afternoon, the Federal Reserve raised its benchmark interest rate by three-quarters of a percentage point in the most aggressive rise since 1994.

Crypto prices initially rallied in the news as investors hoped we could avoid a recession, but that rally was short-lived.

We returned Thursday night. Bitcoin fell to around $ 20,000, a price it has not seen since the end of 2020.

The losses were closely tied to the sell-off on Wall Street, with the Dow falling 700 points to its lowest level in more than a year.

It seems that investors can’t shake the fear of a recession, and some say that it may take time for cryptocurrencies to recover from a sell-off on risky assets.

“I think we’re here for the long haul,” Jill Gunter, co-founder of Espresso Systems and chief strategy officer, told CNBC’s Squawk on the Street.

“I think we’ve brought the elevator down, and I think we, as an industry, have to take the stairs back and go out by building real utilities,” she said.

“In many ways, what we’re seeing is a” healthy washout, “Gunter said.

“No one, as a builder, as a long-term investor … wants to be in a market where it is driven only by short-term price action, by speculation, like, to be honest, the crypto market has largely changed over the past two years,” Gunter continued.

The carnage in the crypto markets shows no sign of slowing down, as Bitcoin and Ether continue their sell-off in a quick clip on Saturday afternoon.

It comes as a crypto hedge fund and businesses face growing questions about bankruptcy.

“Because of these opaque gains we had economic instability, you just can’t tell where all these risks are building up,” Charles Cascarilla, CEO and co-founder of Paxos, told CNBC.

“In some ways, it’s just an old story. You give short loans and long loans. And I think it’s really unfortunate that people lost money, and I think it will, in some way, set the space back, because you have some early You will lose adopters or some newcomers to space, “Cascarilla continued. .

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

“The basic technology here and the eclipse curve we’ve seen, the institutions that are coming in, how you can operate your financial system at the speed of the internet, are the things that need to happen,” he said.