The price of Bitcoin remained under pressure in June, as a number of factors, such as rising rates and a liquidity crisis in the cryptocurrency industry, affected the world’s largest cryptocurrency.
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On Thursday, Bitcoin fell briefly below $ 19,000 as the world’s largest digital currency continues under pressure from macroeconomic concerns and a liquidity crisis among high-profile cryptocurrency companies.
Bitcoin was trading at $ 19,143.50 around 6:10 am ET, up 4% from 24 hours earlier, according to CoinDesk data. The digital currency has fallen about 58% this year alone and has fallen more than 70% from its all-time high of $ 68,990.90 in November.
“Bitcoin continues under pressure like other assets. The combination of high inflation, rising interest rates and recession weighs on cryptocurrencies,” Yves Longchamp, head of research at SEBA Bank focused on digital assets, told CNBC for e-mail.
Global stock markets remain under pressure with the S&P 500 in the U.S. on track for its worst first half of the year since 1970.
Bitcoin has been closely linked to the movement of equity indices and, in particular, the Nasdaq. Shares have been under pressure that has weighed on the price of bitcoin.
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Investors are also concerned about rampant inflation forcing global central banks to raise interest rates. This is also causing fears of a recession in the US and other countries.
Liquidity problems affect crypto companies
The fall in the price of crypto has exposed the highly leveraged nature of the industry and caused a liquidity problem for companies.
Cryptocurrency hedge fund Three Arrows Capital went into liquidation this week, a person with knowledge of the matter told CNBC. The company had exposure to the now-collapsed algorithmic stable currency terraUSD, and the sister moon token. Three Arrows Capital, or 3AC, as it is also known, also failed to satisfy a BlockFi margin call.
A margin call is a situation in which an investor must commit more funds to avoid losses in a transaction made with borrowed cash.
Meanwhile, cryptocurrency exchange CoinFlex halted customer withdrawals last week citing “extreme market conditions.” CoinFlex CEO Mark Lamb also said longtime cryptocurrency investor Roger Ver owes the company $ 47 million. Ver denies that he owes money for the change.
CoinFlex issues a new currency to offset the $ 47 million deficit. Lamb told CNBC in an interview Wednesday that CoinFlex is in talks with several major funds interested in buying the token. He also said withdrawals for customers will not resume on Thursday as planned.
“In this environment, the pressure on bitcoin and other cryptocurrencies remains,” Longchamp said in the face of uncertainty about whether the deleveraging of the industry is over.