Bitcoin’s value fell below US$20,000 on Saturday for the first time since the end of 2020, yet another sign of the crisis affecting the cryptocurrency industry.
Bitcoin, the most popular cryptocurrency, tumbled 9.7% to a value below $18,600 by late afternoon on the East Coast, according to CoinDesk. It even fell below $18,000 during the day.
The last time bitcoin was worth this little was in November 2020, but at that time it was booming. Several industry players then predicted that bitcoin would never fall below $20,000.
After peaking at nearly $69,000, bitcoin has fallen over 70%.
Ethereum, another popular cryptocurrency, has been following the same downward trend for the past few weeks. It suffered a bitcoin-like fall on Saturday.
These falls signal strong disruptions in the cryptocurrency industry and in the financial market. Investors are dumping their riskiest assets as central banks hike interest rates to fight escalating inflation.
The cryptocurrency debacle wiped out tens of billions of dollars in assets. It provoked strong calls for the regularization of this freewheeling sector.
Cesare Fracassi, a professor of finance at the University of Texas, doesn’t believe Bitcoin’s slide should be a big cause for concern. He is more worried about the situation of lending platforms.
“The market is hit by great turbulence,” he said. The reason for the fall in prices is the concern caused by the over-indebtedness of the sector. »
A leading cryptocurrency platform Celsius Network announced this month that it was halting all withdrawals and transfers. The company did not say when its 1.7 million customers will be able to access their funds again.
The Coinbase platform announced on Tuesday the layoff of 18% of its workforce. For the company’s CEO and co-founder, Brian Armstrong, the move was in anticipation of tough times.
Another company, Stablecoin Terra, collapsed last month, losing trillions of dollars within hours.