Cryptocurrencies melted on Saturday and rehearsed recovery; understand what happened – Money Times

Bitcoin (BC) today
Daily summary about Bitcoin, the cryptocurrency market and decentralized finance. (Image: Pixabay/salesblog_at)

This Saturday (18th), the Bitcoin (BTC), the world’s leading cryptocurrency, has dropped below $20,000, hitting its lowest level in 18 months, extending its fall, as investors show nervousness about the growing problems industry and with the general pullback in riskier assets continuing.

At around 6:00 p.m. PDT on Saturday, Bitcoin dropped to around $17,749, while the ether (ETH), operated around US$ 897.

The sell-off in the cryptocurrency market is at a pretty hot moment, as the world’s two most popular cryptocurrencies are down more than 35% in the past week.

Bitcoin, the world’s largest cryptocurrency, last dropped 7.3% to $19,085 from $18,732, its lowest since December 2020.

This Sunday (19), according to the CoinDesk, Bitcoin trades at $19,492, up 1.73% from the previous day; Ether is also up at $1,041, up 4.18%.

Cryptocurrency is down 59% this year, and its main rival, ether (ETH)supported by Ethereum, fell by 73%. In 2021, Bitcoin peaked at $68,000.

A number of reasons can explain the fall of the two cryptocurrencies.

One of them is the pressure of macroeconomic forces, such as inflation and the increase in interest rates by the Federal Reserve (Fed, the Central Bank of the United States).

Cryptocurrency companies are also laying off their employees in massive amounts and some of the most popular names in the industry are collapsing.

But what is going on with cryptocurrencies anyway?

Winter is coming?

It all started on Monday (13), with cryptocurrency prices plummeting and Bitcoin dropping as much as 17%.

In the good old Stark family phrase, from the movie and book series “A Song of Fire and Ice” or Game of Thrones, “winter is coming” — or, at least, in this case, that’s what it seemed to be happening.

That day, the sector took a hit, after cryptocurrency lending company Celsius freezes withdrawals and transfers between accountswhile some crypto companies fired employees and there were reports that a hedge fund of cryptocurrencys had had problems. $12 billion in crypto assets under management by Celsius were blocked

“This risk certainly appears to be just the beginning,” John Todaro, vice president of crypto and blockchain research at Needham, told CNBC. “What I would say is on the decentralized side — a lot of these DeFi protocols, a lot of these positions are over-secured, so you shouldn’t see the underfunding situation that can happen with centralized borrowers and lenders. But that said, you can still see a lot of clearance sales with this guarantee being sold on DeFi protocols,” Todaro continued.

On Tuesday (14), everything seemed to be back to normal (or, at least, “less worse” than the chaos on Monday). On that day, Bitcoin flirted with the $22,000 home, while Ether hovered close to $1,100.

On the same day, on the wave of Celsius, Coinbase announced the layoff of 1/5 of its workforce “due to cryptocurrency volatility”.

“We had the recent inflation report that came out and I think it surprised a lot of people,” explained President and COO Emilie Choi, according to CNBC. “We’ve had Jamie Dimon and others talking about an upcoming economic hurricane, and so given what’s been going on in the economy, it seems like the most prudent thing to do right now,” Choi continued.

Recently, Crypto.com announced that it would reduce its staff by 260 people, while Gemini announced that it would lay off around 10% of its workforce.

To complete the chaos and further lower market temperatures, on Wednesday (15), the Fed raised interest rates to their most aggressive hike since 1994. According to the bank, the hike was made “in an effort to contain high inflation.” After the announcement, cryptocurrencies had a slight rally — but hope was short-lived.

Which led Bitcoin to drop to $ 20,000 on Thursday (16), following the North American market. The Dow Jones index, on the same day, dropped 700 points to its lowest level in more than a year.

On Friday (17) and Saturday, the situation continued to worsen.

“We had financial instability because of this opaque leverage, you just couldn’t tell where all these risks were piling up,” Paxos CEO and co-founder Charles Cascarilla told CNBC.

“In a way, this is just ancient history. You are borrowing short and borrowing long. And I think it’s really unfortunate that people have lost money, and I think, in a way, it’s going to hurt the space, because you’re going to lose some early adopters or some of the people who just entered the space,” Cascarilla continued.

But, according to the “Net Unrealized Profit/Loss” chart – which estimates the total profits/losses in Bitcoin held by investors and not realized [vendidos] – points out that even in times of market recession, only this month we entered the capitulation phase on the part of investors.

*With information from Reuters

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About Abhishek Pratap

Food maven. Unapologetic travel fanatic. MCU's fan. Infuriatingly humble creator. Award-winning pop culture ninja.

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