According to the cryptocurrency news site CoinDesk, the price of the most popular cryptocurrency has dropped as much as 9.7 percent to less than $18,600 by late afternoon on the East Coast. It fell below $18,000 at times throughout the day.
According to CoinDesk, the last time bitcoin was at that level was in November 2020, when it was on its way to an all-time high of about $69,000. Many in the business thought it would never go below $20,000 again.
Since hitting its high, Bitcoin has lost more than 70% of its value.
Ethereum, another popular cryptocurrency that has been declining in recent weeks, fell similarly on Saturday. The cryptocurrency business has been rocked by instability in financial markets – last week was Wall Street’s worst since the early days of the coronavirus outbreak in 2020.
Because central banks are boosting interest rates to battle rising inflation, investors are dumping riskier assets. Higher interest rates may assist to reduce inflation, but they also increase the likelihood of a recession by raising borrowing costs for individuals and companies and driving down stock and other investment values, such as cryptocurrency.
According to coinmarketcap.com, which analyses cryptocurrency prices, the entire market worth of cryptocurrency assets has decreased from $3 trillion to less than $1 trillion. According to the company’s research, the worldwide market value of cryptocurrency was over $816 billion as of Saturday afternoon.
A slew of cryptocurrency meltdowns has prompted urgent demands to regulate the unruly sector, and this week bipartisan legislation to control digital assets was filed in the United States Senate. According to documents and interviews, the business has significantly increased its lobbying efforts, pouring $20 million into congressional campaigns this year for the first time.
Cesare Fracassi, a finance professor at the University of Texas at Austin who directs the school’s Blockchain Initiative, feels bitcoin’s drop below the psychological barrier is insignificant. Instead, he believes the emphasis should be on recent lending platform news.
Celsius Network, one of them, said this month that it was suspending all withdrawals and transactions, with no indication of when its 1.7 million users would be able to access their assets. Another platform, Babel Finance, said in an online notice on Friday that it would stop product redemptions and withdrawals owing to “exceptional liquidity challenges.”
“The market is really volatile,” Fracassi warned. “And the reason prices are falling is because there is widespread worry that the industry is overleveraged.”
Coinbase, a cryptocurrency exchange platform, revealed on Tuesday that it has cut off around 18 percent of its workers, with CEO and cofounder Brian Armstrong attributing part of the layoffs to a looming “crypto winter.”
Last month, the stablecoin Terra exploded, shedding tens of billions of dollars in value in a matter of hours.
Before its recent decline, cryptocurrency had penetrated much of popular culture, with Super Bowl advertising extolling the digital assets and celebrities and YouTube personalities constantly endorsing it on social media.
The latest meltdowns, according to David Gerard, a crypto critic and author of “Attack of the 50 Foot Blockchain,” illustrate a failure by authorities, who he says should have placed greater oversight on the business years ago.
Many new investors, particularly young individuals, bought on the basis of a false hope given to them, he said: “There are actual human victims here who are regular people.”
According to Alex Diaz, the administrator of a Facebook page for Bitcoin aficionados, the bitcoin drop is the result of parallel developments in the cryptocurrency industry, some of which are “simply schemes or outright frauds.”
“All it will take to recuperate is time,” Diaz said.