Bitcoin fell below the psychologically important $ 20,000 ($ 28,855 AUD) threshold on Saturday for the first time since late 2020, in a new signal that cryptocurrency sales are deepening.
The price of the most popular cryptocurrency had fallen as much as 9.7 percent to less than $ 18,600 in the afternoon on the east coast, according to cryptocurrency news site CoinDesk. At some point in the day, it was below $ 18,000.
The last time bitcoin was at this level was in November 2020, when it reached an all-time high of nearly $ 69,000, according to CoinDesk. Many in the industry had believed that it would not fall below $ 20,000 again.
Bitcoin fell below the psychologically important $ 20,000 (AUD $ 28,855) threshold on Saturday for the first time since late 2020. (AFP via Getty Images)
Bitcoin has now lost more than 70 percent of its value since it peaked.
Ethereum, another very popular cryptocurrency that has fallen in recent weeks, suffered a similar crash on Saturday.
The cryptocurrency industry has experienced a turmoil amid widespread turmoil in financial markets: last week was the worst on Wall Street since 2020, during the early days of the coronavirus pandemic.
Investors are selling riskier assets because central banks are raising interest rates to fight accelerating inflation. Higher rates can help reduce inflation, but they also increase the chances of a recession by raising the costs of lending to consumers and businesses and lowering stock prices and other investments such as cryptocurrencies.
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The global market value of cryptocurrency assets has fallen from $ 3 trillion to less than $ 1 trillion, according to coinmarketcap.com, which tracks cryptocurrency prices. As of Saturday afternoon, company data showed that the global market value of cryptography was about $ 816 billion.
A gang of cryptocurrencies has sparked urgent calls to regulate the freewheeling industry, and last week bipartisan legislation was introduced in the U.S. Senate to regulate digital assets. The industry has also stepped up its pressure efforts, flooding $ 20 million in races in Congress this year for the first time, according to records and interviews.
A gang of cryptocurrencies has sparked urgent calls to regulate the freewheeling industry. (Getty)
Cesare Fracassi, a professor of finance at the University of Texas at Austin who runs the school’s Blockchain Initiative, believes that the fall of bitcoin below the psychological threshold is no big deal. Instead, he said the focus should be on the latest news from loan platforms.
One of them, Celsius Network, said this month it was pausing all withdrawals and transfers, with no sign of when it would give its 1.7 million customers access to its funds. Another platform, Babel Finance, said in a notice posted online Friday that it would suspend refunds and product withdrawals due to “unusual liquidity pressures.”
“There’s a lot of turbulence in the market,” Fracassi said.
“And the reason prices are going down is because there’s a lot of concern that the sector is over-leveraging.”
Stablecoin Terra imploded last month, losing tens of billions of dollars in value in a matter of hours.
One expert said the recent crises show a failure of regulators.
Crypto had permeated much of popular culture before its recent fall, with Super Bowl ads promoting digital assets and celebrities and YouTube personalities regularly promoting it on social media.
David Gerard, a cryptocurrency critic and author of “The 50-Foot Block Chain Attack,” said recent mergers show a failure by regulators, who he believes should have done more scrutiny in the industry years ago. .
Many nascent investors, especially young ones, invested based on a false hope that was sold to them, he said, “Here are real human victims who are normal people.”
Alex Diaz, the administrator of a Facebook group for Bitcoin enthusiasts, said he believes the bitcoin crash is not the fault of bitcoin but of parallel developments in the cryptocurrency space, some of which they are “just schemes or scams.”
“What it will take to recover is just time,” Diaz said.