Bitcoin fell below the psychologically important threshold of $US20,000 ($29,000) on Saturday for the first time since late 2020, in a fresh sign that the sell-off in cryptocurrencies is deepening.
- The cryptocurrency industry has seen turmoil amid wider turbulence in financial markets
- Bitcoin hit an all time high of $US69,000
- The overall market value of cryptocurrency assets has fallen from $US3 trillion to below $US1 trillion
The price of the most-popular cryptocurrency had plunged by as much as 12 per cent to less than $US18,100 by late afternoon on the East Coast, according to the cryptocurrency news site CoinDesk.
It was November 2020 when bitcoin was last at that level, when it was on its way up to an all-time high of nearly $US69,000, according to CoinDesk.
Many in the industry had believed it would not fall under $US20,000.
Bitcoin has now lost more than 70 per cent of its value since reaching its peak.
Ethereum, another widely followed cryptocurrency that has been sliding in recent weeks, took a similar tumble on Saturday.
The cryptocurrency industry has seen turmoil amid wider turbulence in financial markets.
Investors are selling off riskier assets because central banks are raising interest rates to combat quickening inflation.
The overall market value of cryptocurrency assets has fallen from $US3 trillion to below $US1 trillion, according to coinmarketcap.com, which tracks crypto prices.
On Saturday, the company’s data showed crypto’s global market value stood at about $US834 billion.
A spate of cryptocurrency meltdowns has sparked urgent calls to regulate the freewheeling industry, and last week bipartisan legislation was introduced in the US Senate to regulate the digital assets.
The industry has also upped its lobbying efforts — flooding $US20 million into congressional races this year for the first time, according to records and interviews.
Cesare Fracassi — a finance professor at the University of Texas at Austin who leads the school’s Blockchain Initiative — says bitcoin’s fall under 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 that it was pausing 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 products due to “unusual liquidity pressures”.
“There is a lot of turbulence in the market,” Mr Fracassi said. “And the reason why prices are going down is because there is a lot of concern the sector is over-leveraged.”
Cryptocurrency exchange platform Coinbase announced on Tuesday that it had laid off about 18 per cent of its workforce, with co-founder and chief executive Brian Armstrong placing some of the blame on a coming “crypto winter”.
Stablecoin Terra imploded last month, losing tens of billions of dollars in value in a matter of hours.
Crypto had permeated much of popular culture before its recent tumble, with Super Bowl ads touting the digital assets, while celebrities and YouTube personalities routinely promoted it on social media.
David Gerard — a crypto critic and author of Attack of the 50 Foot Blockchain — said the recent meltdowns showed a failure by regulators, who, he said, should have put more scrutiny on the industry years ago.
Many nascent investors — especially young people — invested based on a false hope that was sold to them, he said.