Bitcoin Drops Below $18,300 As Selling Intensifies — Here’s What Happened

Bitcoin fell to $18,248, and ether It fell to $944 by mid-afternoon on Saturday, as the selloff in the crypto market intensified. Two of the world’s most popular cryptocurrencies are down more than 35% over the past week, as both breached symbolic price barriers.

The carnage in the crypto market is partly accompanied by pressure from macroeconomic forces, including spiraling inflation and a succession of fed rate hikes, We have seen these blue chip cryptos track equities as well. it doesn’t help Crypto Firms Are Laying Off Huge Numbers of Employeesand some of the most popular names in the industry Facing Solvency Meltdown,

Here’s how we got here.

In the chaos, Celsius, a leading cryptocurrency and lending firm, shocked the market when it announced that all withdrawals, swaps and transfers between accounts have been halted due to “extreme market conditions”. in a memorandum Addressing the Celsius community, the platform also said that the move was designed to “stabilize liquidity and operations.”

celsius effectively off It Has $12 Billion in Crypto Assets Under Management, expressing concerns about the solvency of the Platform. The news spread in the cryptocurrency industry, what happened in May, when a Failed US dollar pegged stablecoin project lost $60 billion in value And with it dragged down the broader crypto industry.

Celsius was known to give users a yield of up to 18.63% on their deposit. It is like a product that the bank will offer without any regulatory safeguards.

Those crazy high yields were what eventually came under scrutiny.

“This risk certainly feels like it’s just the beginning,” John Todaro saidNeedham’s vice president of crypto assets and blockchain research.

“What I would say is on the decentralized side – a lot of these DeFi protocols, a lot of them positions more than collateral, so you absolutely shouldn’t see the underfunding situation happening with centralized borrowers and lenders. But that being said. Well, you can still see a lot of liquidations in which that collateral is being sold on the DeFi protocol,” Todaro continued.

coinbase announced that it was is laying off nearly a fifth of its workforce Due to crypto volatility. The company had earlier cut spending and turned down job offers in hopes of stabilizing its business.

“We recently had inflation reports that I think came as a surprise to a lot of people,” explained President and Chief Operating Officer Emily Choi.

Choi continued, “We’ve talked to Jamie Dimon and others about the upcoming economic storm and so it seems like the most prudent thing to do given what’s happening in the economy.”

Crypto companies across the board are looking for ways to cut costs, as investors exit the riskiest assets, thereby reducing trading volume.

Crypto.com Lately announced a staff shortage of 260 peopleAs did Mithun, who said it would be lay off 10% of its employees – A first for a US-based cryptocurrency exchange and custodian.

micro strategy CEO Michael Sayler appeared on CNBC Wednesday morning to discuss concerns about his firm, which has made a $4 billion bet on bitcoin, Sailor has said The company has doubled as the first and only bitcoin spot exchange-traded fund in the US.That’s why investing in Microstrategy is the closest thing to a bitcoin spot ETF.

MicroStrategy Used Company Debt to Buy BitcoinAnd in March, Sayer decided to take another step toward normalizing bitcoin-backed finance, when he Borrowed $205 million using his bitcoin as collateral – Then to buy more cryptocurrency.

“We have $5 billion in collateral. We’ve borrowed $200 million. So I’m not asking people to go out and take out highly leveraged loans. I guess what I’m doing is taking the route Doing our best to lead and normalize the bitcoin-backed financing industry.” Sailor saidwho added that publicly traded crypto miner Marathon Digital Too Removed a line of credit with Silvergate Bank,

As the bitcoin price plunged this week, investors worried that the company would be asked to provide more collateral for its loan, but Sayer said the fear was over.

“Margin calls about nothing there’s a lot of commotion,” Saylor told CNBC earlier this week, “It made me famous on Twitter, so I appreciate it… We think we have a fortified balance sheet, we are comfortable, and margin debt is well managed.”

Then on Wednesday afternoon, The Federal Reserve raised its benchmark interest rates by three-quarters of a percent In its most aggressive growth since 1994. The Fed said the move was taken in an effort to contain skyrocketing inflation.

Cryptocurrency prices initially stalled on the news as investors were hoping we could survive a downturn, but the rally was short-lived.

“I think we are in a long downtrend here,” said Jill Gunter, Espresso Systems co-founder and chief strategy officer. Told CNBC’s Squawk on the Street,

“I think we’ve taken the elevator down, and I think we, as an industry, have to take the stairs back up and get out there by creating real utility,” she said.

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

“As a builder, as an investor for the long term, one does not want to… live in a market where it is driven only by short-term price action, by speculation, as to be honest, the crypto market has over the years. Quite a lot has been there,” Günter continued.

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

“In some ways, it’s just an old story. You’re borrowing less and lending longer. And I think it’s really unfortunate that people lost money, and I think it In some ways that will set the place back, because you’ll lose some of the early adopters or some of the people who just got into the space,” Cascarilla continued.

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

“The basic technology here and the adoption phase that we see, the institutions that are coming in, how you can get your financial system operating at the speed of the Internet, these are the things that need to happen,” he said. .