In a new indication that the cryptocurrency selloff is intensifying, the price of bitcoin dropped below the mark of $20,000 for the first time since late 2020 last Saturday.
According to the cryptocurrency news website CoinDesk, the most widely used cryptocurrency, Bitcoin, dropped below the psychologically significant level, falling as much as 12 percent to less than $18,100 by mid-afternoon on the East Coast.
According to CoinDesk, the last time bitcoin was at that price was in November 2020, just before it reached its record high of around $69,000. Many in the sector had predicted it wouldn’t fall below $20,000 in price.
Since reaching its high, Bitcoin has lost over 70% of its value.
On Saturday, Ethereum, another widely used cryptocurrency that has been falling lately, experienced a similar decline. It’s the most recent indication of unrest in the cryptocurrency sector amid broader unrest in the financial markets. Because central banks are hiking interest rates to battle accelerating inflation, investors are selling off risky investments.
According to coinmarketcap.com, a business that measures cryptocurrency prices, the total market capitalization of cryptocurrency assets has decreased from $3 trillion to under $1 trillion. According to the company’s data, the market value of cryptocurrency was over $834 billion on Saturday.
Numerous cryptocurrency collapses have destroyed tens of billions of dollars worth of wealth, prompting urgent calls for regulation of the unchecked sector. Bipartisan legislation to control digital assets was filed in the US Senate last week. According to documents and interviews, the crypto business has significantly increased its lobbying efforts, investing $20 million into congressional campaigns this year for the first time.
The Blockchain Initiative, led by finance professor Cesare Fracassi at the University of Texas at Austin, said that he doesn’t think that it’s a huge concern that Bitcoin fell below the psychological barrier. He suggested that attention should be paid to the latest information from loan platforms.
Cryptocurrency loan company Celsius Network declared this month that it was halting all withdrawals and transfers, with no indication of when it would let its 1.7 million users access their assets. Babel Finance, another cryptocurrency lending company, announced in a note published on its website on Friday that it will stop allowing product redemptions and withdrawals due to “exceptional liquidity pressures.” Market instability is intense, according to Fracassi. “And there is a lot of anxiety that the sector is overleveraged, which is why prices are declining.”
The CEO and co-founder of the cryptocurrency exchange platform Coinbase, Brian Armstrong, blamed an approaching “crypto winter” for part of the layoffs, which amounted to around 18% of the company’s personnel.
Last month, the stable coin Terra exploded, losing tens of billions of dollars’ worth in only a few hours.
Before its recent decline, the cryptocurrency had become deeply ingrained in popular culture, with many Super Bowl commercials praising the digital assets and celebrities and YouTube personalities frequently endorsing it on social media.
The recent meltdowns, according to crypto critic and author of “Attack of the 50 Foot Blockchain,” David Gerard, demonstrate a failure on the part of authorities who, in his opinion, should have been monitoring the industry more closely years ago. He claimed that many new investors, particularly young people, put their money into cryptocurrencies based on a false optimism that was marketed to them.