Crypto industry gripped by anxiety as bitcoin wobbles near key $20,000 level -Breaking
By Alun John
HONG KONG (Reuters – Investors feared that a contagion of problems at key crypto companies could cause a huge shakeout.
It has fallen below $20,000 for the first weekend since December 2020, after losing 57% of its total value this year. It is symbolic because it represents the height of 2017’s cycle.
This price drop follows problems at major players in the industry. Further declines may have an impact on other investors as they are required to sell to cover margin calls or to recover losses.
Three Arrows Capital crypto hedge fund is looking into its options including the sale or bailout of its assets by another firm. The Wall Street Journal was told Friday that its founders spoke out about Three Arrows Capital’s plans in an article published on Friday. Its announcement came the same day as Asia-focused cryptocurrency lender Babel Finance announced it will suspend withdraws.
Celsius Network, a U.S.-based lender, announced earlier in the month that it would stop withdrawing funds. Many of the recent industry problems are attributed to TerraUSD’s spectacular fall in May.
Bitcoin traded on either side of $20,000 Monday while the no.2 token of ether was at $1.075. It had fallen below its symbolic level of $1,000 during the weekend.
If the market moves higher, everybody breathes a sigh and everything will go well. People will raise equity and things will get refinanced. Adam Farthing (chief risk officer for Japan, crypto liquidity provider B2C2) said that if the market moves lower, it could lead to a complete shitstorm.
The system is seeing a large amount of credit removed. If lenders are forced to take losses from Celsius or Three Arrows they will decrease the size of future loan books. This means that there is less credit in crypto.
Farthing stated that it felt very much like 2008.
It is clear that crypto developments have been accompanied by a slide in equities. U.S. stocks experienced their largest weekly percentage drop in over two years due to rising interest rates, and growing fears about a recession. [MKTS/GLOB]
The price of bitcoin has moved in an almost identical manner as other risk assets, such as tech stocks.
As investors looked for the safety and stability of smaller cryptocurrencies, which are based on traditional assets like the U.S. dollars, they were even more affected than the major ones.
According to Coinmarketcap.com, there is an overall market capitalization of $870 billion for crypto, down from $2.9 trillion as of November 2021.
However, the market capitalisations of stablecoins has fallen in recent months. Investors may now be pulling their money out from the entire sector.
The world’s most popular stablecoin,., saw its market cap drop to approximately $68 Billion on Monday. It was previously valued at over $83,Billion in May.