Representations of the virtual currencies Ripple, Bitcoin, Etherum and Litecoin can be seen on the computer motherboard of this illustration, February 14, 2018. REUTERS / Dado Ruvic / File Photo
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LONDON / HONG KONG, June 20 (Reuters) – The cryptocurrency industry was on the brink on Monday as bitcoin struggled to stay above key levels, with investors fearing problems with large cryptocurrencies could trigger greater market turmoil.
Bitcoin, the world’s largest cryptocurrency, traded just below the symbolic level of $ 20,000 in the early hours of trading in London – roughly the peak of its charge compared to the previous record in 2017.
Bitcoin fell to $ 17,592.78 on Saturday, falling below $ 20,000 for the first time since December 2020. It lost almost 60% of its value this year and 37% this month alone in the latest collapse of the cryptocurrency sector.
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Its decline is due to problems in several major players in the industry. Further declines, market participants said, could have the opposite effect, as other crypto investors are forced to sell their assets to meet margin claims and cover losses.
Crypto hedge fund Three Arrows Capital is exploring options, including selling assets and rescuing another company, its founders told the Wall Street Journal in an article published Friday, targeting Asia crypto lender Babel Finance, which said it would suspend withdrawals. Read more [nL4N2Y42I2]
US-based lender Celsius Network said this month it would suspend customer withdrawals. In a blog post Monday, Celsius said it would continue to work with regulators and employees, but would pause customer question and answer sessions. Read more
“There are a lot of loans being withdrawn from the system, and if lenders have to take losses in Celsius and Three Arrows, they will reduce the size of their future credit books, which means that the total amount of credit available in the crypto ecosystem is greatly reduced. “Said Adam Farting, Japan’s chief risk officer at B2C2, a cryptocurrency provider.
“It’s very similar to 2008 in terms of how the domino effect of bankruptcies and liquidations can have an effect,” Farting said.
Smaller tokens, which usually run in tandem with bitcoin, were also injured. Token Ether № 2 was at $ 1.0752, falling below its own symbolic level of $ 1,000 over the weekend.
The decline in crypto markets coincided with a decline in stocks, as US stocks suffered their biggest weekly decline in two years due to fears of rising interest rates and the growing likelihood of a recession.
Bitcoin movements tend to follow a similar pattern to other risky assets such as technology stocks.
The total capitalization of the crypto market capitalization is approximately 877 billion dollars, according to the price site Coinmarketcap, which is a drop from the peak of 2.9 trillion dollars in November 2021 read more
Decreasing stable coins – a type of cryptocurrency designed to maintain stable value – also suggests that investors are withdrawing money from the sector as a whole. Read more
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Report by Alan John, edited by Sri Navaratnam and Ed Osmond
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