Bitcoin Drops Below $17,800 As The Selling Speeds Up – Here’s What Happened:


Bitcoin fell to $17,749 and ether dropped to $897, as of about 4:15 AM ET on Saturday afternoon, as the crypto market sell-off accelerates. The two most popular cryptocurrencies in the world have fallen more than 35% in the past week as both break through symbolic price barriers.

Bitcoin peaked at $68,789.63 in November and last traded around November 2020.

The crypto market carnage is partly driven by pressure from macroeconomic forces, including mounting inflation and a succession of Fed rate hikes. We have also seen these blue chip cryptos track stocks lower. It doesn’t help that crypto companies are laying off large numbers of employees, and some of the most popular names in the industry are facing a solvency collapse.

Here’s how we got here.


Celsius CEO Alex Mashinsky.

Piaras Ó Midheach | Sports file for Web Summit | Getty Images

The week started with a plummeting crypto price and bitcoin plunged as much as 17% at any given time of the day. It seemed like the crypto winter was here.

In the chaos, Celsius, a major cryptocurrency investing and lending company, shocked the market when it announced that all withdrawals, swaps and transfers between accounts have been suspended due to “extreme market conditions.” In a memo addressed to the Celsius community, the platform also said the move was aimed at “stabilizing liquidity and operations”.

Celsius effectively locked up its $12 billion in crypto assets under management, raising concerns about the platform’s solvency. The news rippled through the crypto industry, somewhat reminiscent of what happened in May, when a failed US dollar-pegged stablecoin project lost $60 billion in value and swept the broader crypto industry.

Celsius was known for providing users with returns of up to 18.63% on their deposits. It’s like a product that a bank would offer, but without the legal safeguards.

Those insanely high yields eventually came under scrutiny.

“This risk certainly seems like just the beginning,” said John Todaro, vice president of crypto assets and blockchain research at Needham.

“What I would say is on the decentralized side – a lot of these DeFi protocols, a lot of those positions are over-collateralised, so you shouldn’t quite see the underfunding situation that could happen with centralized borrowers and lenders. But that said. “You could still see a lot of liquidations where that collateral was sold on DeFi protocols,” Todaro continued.


People watch as the logo of Coinbase Global Inc, the largest US cryptocurrency exchange, is displayed on the Nasdaq MarketSite jumbotron in Times Square in New York, US, April 14, 2021.

Shannon Stapleton | Reuters


Michael Saylor, chairman and chief executive officer of MicroStrategy, first encountered bitcoin in 2020, when he decided to add the cryptocurrency to MicroStrategy’s balance sheet as part of an unorthodox treasury management strategy.

Eva Marie Uzcategui | Bloomberg | Getty Images

MicroStrategy CEO Michael Saylor appeared on CNBC Wednesday morning to discuss concerns surrounding his company, which has placed a $4 billion bet on bitcoin. Saylor has said the company also serves as the first and only bitcoin spot exchange-traded fund in the US, so investing in MicroStrategy is the closest thing to a bitcoin spot ETF.

MicroStrategy has used corporate debt to buy bitcoin, and in March Saylor decided to take another step toward normalizing bitcoin-backed funding when he borrowed $205 million with his bitcoin as collateral — then bought more of the cryptocurrency. .

“We have $5 billion in collateral. We borrowed $200 million. So I’m not telling people to take a high leverage loan. What I’m doing, I think, is doing my best to lead the way and the bitcoin-backed finance industry,” said Saylor, adding that publicly traded crypto miner Marathon Digital also closed a line of credit with Silvergate Bank.

When bitcoin prices plummeted this week, investors feared the company would be asked to provide more collateral for its loan, but Saylor said the fears were overblown.

“The margin call is a lot of fuss about nothing,” Saylor told CNBC earlier this week. “It just made me famous on Twitter, so I appreciate that… We feel like we have a strong balance sheet, we’re comfortable and the margin lending is well managed.”

Then, on Wednesday afternoon, the Federal Reserve raised its benchmark interest rate by three-quarters of a percentage point in its most aggressive hike since 1994. The Fed said the move was made in an effort to curb skyrocketing inflation.

Crypto prices initially rose on the news as investors hoped we could avoid a recession, but that rally was short-lived.


Bitcoin and other cryptocurrencies are in free fall.

Dan Kitwood | Getty Images

friday on saturday

Bitcoin and other cryptocurrencies fell sharply as investors dump risky assets. A crypto lending company called Celsius is pausing withdrawals for its clients, raising fears of contagion in the broader market.

Nurfoto | Nurfoto | Getty Images

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