Cryptocurrency investors are grappling with strong interest rate hikes from the US Federal Reserve and a worsening liquidity crunch.
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Bitcoin dropped below the $20,000 mark on Saturday, prolonging the cryptocurrency’s brutal slide.
Bitcoin price fell 9% in 24 hours to $19,217.81, according to Coin Metrics data. The last time bitcoin fell below that level was December 2020.
Ether, the second largest token, dropped 10% to $997.75, its lowest level since January 2021.
Cryptocurrency investors are grappling with strong interest rate hikes from the US Federal Reserve and a worsening liquidity crisis that has pushed major players into financial distress. main.
Fed on Wednesday interest rates up 75 basis pointsthe biggest gain since 1994. That led to a retreat from risk assets of all kinds, including stocks and cryptocurrencies.
Elsewhere, the crypto space is still reeling from the $60 billion crash of two major tokens last month.
Terra, a so-called stablecoin meant to be worth $1, has dropped to a fraction of a cent, taking away a related coin called luna. This week, the 3 billion dollar crypto lender Celsius suspend withdrawalslocked users out of their funds and raised concerns that they could face insolvency.
Celsius works a lot like a bank, accepting cryptocurrency from investors and lending it to institutions to generate returns on deposits. It houses a lot of assets in the so-called decentralized finance space.
Celsius, which says it is “acting in the interest of our community,” did not return multiple requests for comment.
Another key player, Three Arrows Capital, is in the midst of its own liquidity crisis. A $10 billion crypto hedge fund is reportedly on the verge of default after the plunging crypto market reduced the value of its holdings.
3AC is an investor in Terra and has staking based on multiple tokens including bitcoin, ether, and solana.
Zu Shu, the company’s co-founder, said it is “in the process of communicating with stakeholders and is fully committed to resolving this issue.” On Friday, he told The Wall Street Journal that 3AC was considering an asset sale and a rescue by another company to avoid collapse.
Three Arrows Capital did not respond to CNBC’s request for comment.
