Wednesday, Nov 30, 2022
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Crypto Industry seized by anxiety as Bitcoin dips below $20,000

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The price drop comes as a result of problems at multiple large industry players.

The cryptocurrency industry was in an uneasy position on Monday morning as investors feared a state of corruption from problems faced by major crypto players which could unleash a huge disaster if not contained.

Bitcoin, lost 57% this year and 37% this month, dipping below USD 20,000 for the first time since December 2020 over the weekend. The level has had a symbolic value because it corresponds to the peak of the 2017 cycle.

The price drop comes as a result of problems at multiple large industry players, and future drops might have a cascading impact as other crypto investors are forced to sell their holdings to pay margin calls and cover losses.

Crypto hedge fund, Three Arrows Capital is exploring several options which include the sale of assets and a bailout by any other firm, as told by the founders to the Wall Street Journal.

Meanwhile, the following day, Asia-focused crypto lender, Babel Finance would soon be suspending its withdrawals. US-based lender too states that it will be suspending all its withdrawals.

On June 13, Bitcoin was trading at either side of USD 20,000 while the second token, ether was at USD 1,075 dipped below its own symbolic level which is USD 1,000.

The rise in crypto has coincided with a drop in the stock market, with US stocks falling by the most in two years on fears of rising interest rates and a growing risk of recession.

The price of bitcoin has tended to swing in a similar way to other risk assets like tech stocks.

Investors have sought the relative safety of bitcoin and stablecoins, whose values are tethered to established assets, most often the US dollar. Smaller cryptocurrencies have been hammered even harder than major tokens.

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