Bitcoin fell below the psychologically important US$20,000 ($29,000) threshold on Saturday for the first time since late 2020, in another sign that cryptocurrency selling is deepening.
- The cryptocurrency industry has seen turmoil amid broader financial market turmoil
- Bitcoin hit an all-time high of US$69,000
- The overall market value of cryptocurrency assets has fallen from $3 trillion to less than $1 trillion.
The price of the most popular cryptocurrency had fallen 12% to below $18,100 by late afternoon on the East Coast, according to cryptocurrency news site CoinDesk.
Bitcoin was last at this level in November 2020, when it was on its way to an all-time high of nearly US$69,000, according to CoinDesk.
Many industry players believed it would not fall below US$20,000.
Bitcoin has now lost over 70% of its value since peaking.
Ethereum, another widely followed cryptocurrency that has slid in recent weeks, suffered a similar drop on Saturday.
The cryptocurrency industry has seen turmoil amid broader turmoil in financial markets.
Investors are selling riskier assets because central banks are raising interest rates to fight rising inflation.
The overall market value of cryptocurrency assets has fallen from $3 trillion to less than $1 trillion, according to coinmarketcap.com, which tracks crypto prices.
On Saturday, data from the company showed the global crypto market value to be around $834 billion.
A series of cryptocurrency meltdowns have sparked urgent calls to regulate the freewheeling industry, and last week bipartisan legislation was introduced in the US Senate to regulate digital assets.
The industry has also stepped up its lobbying efforts – flooding US$20 million in congressional races for the first time this year, records and interviews show.
Cesare Fracassi — a finance professor at the University of Texas at Austin who leads the school’s Blockchain Initiative — says bitcoin’s fall below the psychological threshold isn’t a big deal.
Instead, he said, the focus should be on recent news from lending platforms.
One of them, Celsius Network, said this month it was suspending all withdrawals and transfers, with no sign of when it would give its 1.7 million customers access to their funds.
Another platform, Babel Finance, said in a notice posted online on Friday that it would suspend redemptions and withdrawals on the products due to “unusual liquidity pressures”.
“There is a lot of turbulence in the market,” Mr. Fracassi said. “And the reason prices are falling is there’s a lot of concern that the sector is over-leveraged.”
Cryptocurrency exchange Coinbase announced on Tuesday that it had laid off about 18% of its workforce, with co-founder and chief executive Brian Armstrong blaming some of the blame on an upcoming “crypto winter.”
Stablecoin Terra imploded last month, losing tens of billions of dollars within hours.
Crypto had permeated much of popular culture before its recent downfall, with Super Bowl ads touting digital assets, while celebrities and YouTube personalities regularly promoted it on social media.
David Gerard – crypto critic and author of Attack of the 50 Foot Blockchain – said the recent meltdowns showed a failure of regulators, who he said should have been monitoring the industry more years ago.
Many nascent investors — especially young ones — invested on the basis of a false hope that was sold to them, he said.
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