Bitcoin fell below the $20,000 mark on Saturday 18, extending the brutal sink at cryptocurrency prices.
The Bitcoin price fell by 9.33% within 24 hours to $19,089. This is according to data obtained from cryptocurrency exchanges like Coinbase, Binance, and CoinMarketCap. The last time the BTC price fell to that level was in December 2020. The following BTC to USD chart shows how the Bitcoin value has changed in the past 24 hours.
Ethereum, the second-largest cryptocurrency by market cap, fell by about 9.08% to an Ethereum price of about $993. This is its lowest level since January 2021. This is according to data obtained from Coinbase, Binance, and Coin Market Cap. The following chart shows the changes in the Ethereum price in the past 24 hours.
Cryptocurrency investors are now dealing with high-interest rate hikes from the U.S Federal Reserve. They are also grappling with worsening liquidity which has pushed many cryptocurrency players into a financial crisis.
On June 15, Fed announced that it will be hiking interest rates by 75 basis points, the biggest increase since 1994. Following this announcement, the Bitcoin price bounced by 8% but later pulled back to a price of about $21,500. Fed’s decision seems to have caused a retreat in risky assets of all types, including stocks and cryptocurrencies.
Elsewhere, the cryptocurrency market is still recovering from the $60 billion collapses of two blockchain projects in May.
Terra, a so-called stablecoin was pegged to the U.S dollar and was meant to maintain a value of $1. However, it crashed to a fraction of a cent, taking down with it its sister token, Luna.
This week, Celsius, a leading cryptocurrency lender worth $3 billion, paused all withdrawals, blocking users from accessing their funds and raising insolvency fears.
Celsius operates more like a bank, taking cryptocurrency deposits from users and lending them out to institutions. It pays huge returns to its users for their deposits, and some have termed it a “Ponzi scheme” because of the huge returns it pays its users. Celsius holds assets in the decentralized finance space.
Celsius said it was “acting in the interest of our community,” but did not return any requests for comment.
Another key player in the cryptocurrency market, Three Arrows Capital, is battling a liquidity crisis. The crypto hedge fund is on the brink of insolvency after the ongoing decline in the cryptocurrency market reduced the value of its holdings.
3AC had invested in Terra and has made leveraged bets in different tokens including Bitcoin, Ethereum, and Solana.
Zu Shu, its founder, said they are “in the process of communicating with relevant parties and fully committed to working this out.” He also said that 3AC was in the process of considering selling its assets and seeking rescue from another firm to save it from collapsing.
In other crypto news, despite the current decline in the cryptocurrency market, Binance, one of the largest cryptocurrency exchange platforms in the world by market volume, has no plans to pause its expansion plans but intends to recruit 2,000 additional employees.
According to Gwendolyn Regina, the BNB Chain investment director, “Bear markets are a great way to assess and support projects that truly make a difference in the blockchain ecosystem. If anything, now is the best time to spot strong, mission-driven projects and assist their growth and development.”