Bitcoin Stabilizes After Heavy Losses But Pessimism Reigns In Crypto Markets
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LONDON/WASHINGTON, June 14 – Bitcoin steadied on Tuesday after earlier hitting a new 18-month low, as major crypto lender Celsius Network’s freezing of withdrawals and the prospect of sharp U.S. interest rate rises shook the volatile asset class.
Bitcoin clawed its way to positive territory after much as 7.3% overnight to $20,816, its lowest since Dec. 2020. It was last hovering around $22,470.
The world’s largest cryptocurrency fell 15% on Monday, its sharpest one-day drop since March 2020. It has shed about half its value this year and over 20% since Friday alone. Since its record high of $69,000 in November, it has slumped nearly 70%.
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Citing “extreme” market conditions, New Jersey-based Celsius said this week that it had frozen withdrawals and transfers between accounts “to stabilise liquidity and operations while we take steps to preserve and protect assets.”
The move, combined with expectations of sharper U.S. Federal Reserve interest rate hikes after high U.S. inflation data last week, pushed the value of the crypto market under $1 trillion for the first time since January 2021. read more
Most crypto market-watchers were pessimistic on bitcoin’s immediate prospects.
Bitcoin’s slump is likely to have ramifications for other companies exposed to the crypto market.
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What Crypto Investors Need To Know
Experts agree that anyone choosing to jump into the cryptocurrency market need to understand the high-risk nature of these investments.
“Like any asset that’s jumping around in price, people see an opportunity for quick gains,” said Rogers. “Our concern is they may not understand the risks. They may not even understand that it’s not a regulated area.”
This risk factor also applies to algorithmic stablecoins, as the TerraUSD crash demonstrates.
“You need to be prepared for the volatility, like all risk assets, and you need to be very cautious when promoters of certain acid crypto assets are making claims about their stability or making claims about their guaranteed yields,” Clements.
With files from Reuters.
Recap: 2021 Bull Run And 2022 Crypto Crash
In 2021, cryptocurrency prices surged to new-highs, boosted by ultra-low interest rates, a growing retail investor base and increased institutional participation. By November 2021, BTC hit an all-time high of $68,789.
The rest of the cryptocurrency market followed suit as ether , the second largest cryptocurrency, breached its record high level in November 2021 to peak at $4,891.
2022 has turned out to be a different story. High inflation in the US and globally has pushed central banks to reduce cheap liquidity. The US Federal Reserve has embarked on an aggressive monetary tightening cycle, having followed up a 25 basis points rate hike in April and a 50 bps increase in May with a 75 bps hike in June.
After confirming the Fed’s intent to continue raising interest rates, Powell dismissed the idea that the Fed was trying to induce a recession, the company added.
Tight monetary conditions and fears of recessions have resulted in investors pulling their money out of risk assets. US equities are officially in a bear market. The benchmark S& P 500 index has fallen over 20% year-to-date , as of 22 June.
In the crypto space, BTC is currently hovering near the $21,000 mark, having recovered from levels as low as about $17,500.
Meanwhile, ETH saw prices plunge as low as $879 on 18 June, its lowest since January 2021. The second largest cryptocurrency by market capitalisation is down nearly 70% YTD, as of 22 June.
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How Bad Is The Latest Bitcoin Crash
20:36 , Anthony Cuthbertson
Crypto market analysts are divided over whether were nearing the end of the bear market, or still firmly in the middle of it.
With more than 60 per cent losses for bitcoin since its November 2021 price peak, some believe it could still rival the 80 per cent+ losses seen during the market corrections of 2013 and 2017.
After dropping below $1 trillion today for the first time since 2020, weve asked analysts which way they think the crypto market is heading from here.
You can read all about it here:
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Bitcoin is now worth half the value it was just six months ago when it reached a market high of £51,000 per coin on 10 November 2022, while Terra has collapsed after a major drop of 96%.
- Bitcoin -9.52%
- SHIBA INU -11.11%
- Celsius -53.31%
The recent decline is being attributed to comments made by Bill Gates on Reddit, in which the Microsoft founder said: I like to invest in things that have value. The value of companies is based on how well they make great products. The value of crypto is just based on what one person decides how much another person will pay for it.
It follows a loss of confidence in the crypto market amid economic pressures around the world brought on by Russias invasion of Ukraine and post Covid lockdowns.
And recent crashes brought on by Tesla making a u-turn on accepting Bitcoin as payment for its products and China clamping down on initial coin offerings, block exchanges and warned against speculative trading.
A further blow was dealt when China ordered Bitcoin mining in its Sichuan province to shut down completely and furthermore told banks to stop supporting crypto transactions, in a latest wave of restrictions on cryptos.
Now the countrys central bank, Peoples Bank of China, has effectively banned digital coins after announcing all transactions of cryptocurrencies are illegal.
The decision has already had an impact on the global crypto market.
This is whats going on in the world of cryptocurrencies…
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Why Did Bitcoin Drop In December 2021
A downturn in global stocks due to the uncertainty around a new Covid variant and high inflation, has spilled over into the cryptocurrency market, combined with fears over further regulation.
The price of bitcoin and a number of other notable digital assets dropped heavily at the start of December creating mini-flash crash in prices. Bitcoin
Why is bitcoin so volatile?
Crypto Crash: What Investors Need To Know
Bitcoin’s value fell by more than half its value since its November 2021 peak, which caused the entire cryptocurrency market to collapse. Terra and TerraUSD both experienced such steep declines that investors may be spooked. When both cryptocurrencies were enjoying their honeymoon period a month ago, who would have thought they would face such a steep fall? The weak sentiment spread across the crypto market resulted in investors withdrawing their money, causing Tether to lose its peg to the dollar.
The week not only taught investors to invest carefully, but it also busted many myths about the cryptocurrency market.
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Why Did The Crypto Market Crash On June 6
TL DR Breakdown
- The previous 24 hours have seen a dramatic decline in cryptocurrency markets.
- Various factors, ranging from the US bill leak to Elronds Maiar DEX unknown exploit, are at play.
- Is the cryptocurrency market now moving more like a stock market?
Today, the worldwide crypto markets have fallen to a $1.22 trillion market cap. Cryptopolitan reports the values of several popular digital assets, including Bitcoin, Binance, Cardano, and XRP, have all dropped significantly in value.
As Bitcoin continues to fall, short-term and long-term factors are to blame. For example, the decline of key stablecoins and macroeconomics. Investors in crypto have long expected that the technologys decentralized character will make it immune to inflation and other disasters.
Whats the actual story here? For the digital assets market, what can we expect next?
Was That Decline Related To The Turmoil In The Regular Economy
Probably. Tech stocks in general have been crushed in recent months, with high inflation undercutting the appeal of high-growth, low-profit investments and a series of punishing revelations from the largest companies raising fundamental questions about the limits to their potential expansion.
Bitcoin fans may promote an image of their currency as a sort of digital gold, with a limited supply that makes it function as an effective hedge against inflation. But in practice, when inflation rises, bitcoin tumbles, and as growth prospects diminish, so too does the opportunity for a digital revolution.
On top of that, the crypto economy seems disproportionally driven by retail investors, who treat the sector like a halfway house between conventional day-trading and straightforward gambling. As rising costs bite, those investors may be forced to liquidate some of their holdings, pushing the sector even further into the red.
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Global Crypto Market Cap Is At $ 80951 Billion After Slipping 865 Per Cent Experts Pessimistic About The Future Outlook
Cryptocurrency markets are witnessing a bloodbath over the last 24 hours. The global market cap is down by 8.65 per cent in the last 24 hours and is at $ 809.51 billion as of 11.30 AM IST, CoinMarketCap data showed.
Bitcoin is down by a whopping 11.20 per cent and is trading at $18,132.
Ethereum also showed a major downtrend and fell below the $1000 barrier and is at $ 946 after sliding down 12.15 per cent.
The BNB token plummeted by 9.64 per cent.
The ADA token crashed by 9.13 per cent.
The meme coin Doge slipped 9.30 per cent.
Overall, the majority of top cryptocurrency tokens slid drastically from their positions over the last 24 hours.
The global cryptocurrency market cap has crashed to $ 809 billion levels. It’s worth noting that the market cap was at $3 trillion roughly seven months ago at its all-time high.
Because of the crypto crash, Bitcoin ‘Fear and Greed’ Index has dropped below 8, indicating extreme fear.
Sharat Chandra, vice president of Research and Strategy at EarthID told Business Today that Bitcoin’s future outlook is pessimistic.
He said, “Macro indicators signal that Bitcoin is entering the deepest phase of the bear cycle.”
Speaking of HODLers, he said, “Even the long-term Bitcoin holders have realized significant losses. Increased realized losses are driving Bitcoin prices to newer lows.”
He further added,” Bitcoin’s seven-day moving average has reached a 2-year low of 0.92537.”
How Did The Crypto Market Crash Affect The Price Of Bitcoin
Lets circle back to those Bitcoin reserves. You know, in case things got ugly? TerraUSD founder, Do Kwon, created a Bitcoin reserve to help restore parity should UST ever drop too far below $1 US. He could sell Bitcoin and buy UST until the price recovered. And thats exactly what he did, sort of.
As both UST and LUNA fell, Kwon drained the $3 billion Bitcoin reserve and transferred it to at least two major crypto exchanges. From there, the trail goes dark. We cant see if the Bitcoin was sold, loaned out, or moved to a private wallet. So what did Kwon do with all that Bitcoin? We dont know for sure.
On Twitter, he claims the plan is to lend Bitcoin over the counter to market makers, which are liquidity pools that facilitate trading. What we do know is that the price of Bitcoin dropped about 25% during the carnage. Draining the Bitcoin reserve likely impacted the price of Bitcoin, but the carnage was enough on its own to scare enough crypto holders into selling whatever they had, triggering a crypto market crash.
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Three Reasons Behind The Crypto Market Crash
Total market cap has tanked to a ten-month low of $1.6 trillion.
Fed interest rate hikes are driving investors back to traditional assets.
Institutions are also cooling on crypto following an epic 2021.
Total crypto market capitalization has fallen to its lowest level in ten months. A further $130 billion has left the space over the weekend resulting in a market cap slump to $1.62 trillion. It has not been this low since early August, according to CoinGecko.
Bitcoin and Ethereum lead losses again during the Monday morning Asian trading session. Bitcoin has shed a further 3.1% to $33,486 at the time of writing, and Ethereum is down 4.2% to $2,443, its lowest price since January.
Crypto markets are cyclical, but there are a couple of other factors driving the selloff at the moment.
What Is The Price Of Bitcoin And Ethereum
The price of Bitcoin was £20,286.78 after the latest drop in prices , according to Coinbase.
Ethereums value is now £1,047.41.
Cryptocurrencies are seen as an alternative to traditional banking methods, cheaper to move money around due to not being regulated by the government or its banks.
The decision by Tesla, and announced by Musk, was seen by some as a slight on the credibility of cryptos to become a viable method of payment against physical currencies.
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Stablecoins Aren’t Always Stable
Stablecoins are supposed to maintain their value. They are backed by fiat currencies like the US dollar, gold, and even other cryptocurrencies. The collapse of Bitcoin badly affected Terra and TerraUSD. The functioning of Terra is to blame for this.
Terra and TerraUSD are two native tokens of the Terra network. TerraUSD aims to maintain its peg to the US dollar using algorithms. So if one wants to mint UST, he needs to burn the dollar-equivalent amount of LUNA. It works the same way the other way around. That’s how the protocol maintains the price of UST.
In March 2022, to add more cushion to its stablecoin, Terra’s creator, the Luna Foundation Guard , decided to add Bitcoin to its reserve, according to TechCrunch.com. The idea was if something goes wrong with the prices, Bitcoin-backing would help to stabilize UST. Unfortunately, that didn’t happen, and the stock market collapsed, Bitcoin collapsed, and then the whole crypto market collapsed.
Terra is currently trading at $0.000000999967 per token, a 14.359% decline from an all-time high of $119.18 in April 2022, according to coingecko.com. TerraUSD , which has lost its dollar peg, is currently trading at $0.13, reported coingecko.com.
What If Youre Interested In Crypto But Havent Yet Invested
Yangs set it and forget it approach to crypto reflects his philosophy for investing in the traditional stock market, but some experts feel cryptocurrency is too different from traditional investments to draw any historical comparisons. Thats why AShira Nelson of Savvy Girl Money is staying well away.
Nelson primarily invests in low-cost index funds because I can see history on that, she says. The newness of cryptocurrency and lack of trackable data make her wary of these crazy swings.
Potential investors looking to buy the dip should understand that fluctuations are par for the course, and be prepared for this kind of volatility going forward. Even if you invest now, with prices relatively low, be prepared for them to fall even more. Again, only put in what youre comfortable with losing after youve covered other financial priorities, like emergency savings and more traditional retirement funds.
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Which Cryptocurrencies Will Survive
The top 20 most-traded cryptocurrencies are a good place to start. If and when the cryptocurrency markets crash, it will be relatively easy to identify some notable survivors in this list. Bitcoin is the first cryptocurrency and is quickly gaining popularity as a store of value.
Offshoots such as Litecoin and Bitcoin Cash were born from its blockchain and codebase. Both are vying to be the most popular cryptocurrency for everyday transactions.
Ethereum’s world of decentralized applications, or Dapps, is quickly gaining traction, and it’s responsible for a slew of tokens built on its platform, including Populous.
Others, such as Dash, have staked similar claims and carved out niches in both emerging and developed markets, such as Zimbabwe and Spain.
NEO has the potential to be a dark horse. It’s geared toward the smart economy, and it’s collaborating with the Chinese government to expand the country’s cryptocurrency ecosystem. It has also collaborated with the Japanese Ministry of Economy and announced a strategic partnership with Microsoft China.
Moving down the list, however, reveals cryptocurrencies that require a higher level of risk tolerance from investors. TRON, for example, a cryptocurrency that has recently risen in popularity, lacks a product and has an inexperienced founder.
However, in terms of partnerships or experience in those areas, the startup has very little to show.
Crypto Crash: Forced Selling Cools Down Correlation With Equities Back In Focus
Hello! Welcome back to Distributed Ledger, our weekly crypto newsletter that reaches your inbox every Thursday. Ill walk you through whats going on in the current bear market.
As usual, find me on Twitter at to send feedback, or tell us what you think we should cover. You can also to share your personal stories with crypto.
, went up about 23.3% from seven days ago.
Over the past weekend, a steep selloff sent bitcoin to as low as $17,601, before it rebounded to around $20,382 on Thursday. The plunge was largely driven by forced selling, according to Thomas Dunleavy, senior research analyst at Messari.
The crypto market was in chaos after Celsius, one of the largest crypto lenders, paused withdrawals since June 12, while Three Arrows, one of the most active hedge funds in the space, reportedly failed to meet margin calls from several lenders, according to Financial Times. Investors were concerned about the contagion risks Ive .
During the recent selloffs, bitcoin and ether underperformed some smaller coins, which is very unusual, according to Dunleavy. Bitcoin and ether typically tend to outperform smaller coins during market downturn, as investors switch to the flight to safety mode.
The latest trend is an indication that folks are just selling whatever they had to meet any sort of margin requirements, according to Dunleavy.
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