Bitcoin slumped below $18,000 for the first time since December 2020, after crypto companies began laying off employees and investors shunned risky assets as interest rates rose.
According to data from analytics firm Coinmarketcap, the value of the global cryptocurrency market, including Bitcoin, fell by about 0.17% in just 24 hours, to just under $836 billion.
The price of the largest cryptocurrency, Bitcoin, temporarily fell below $18 thousand for the first time since December 2020, and then recovered slightly and rose above $19 thousand.
About 31% depreciation in 7 days
Bitcoin’s depreciation in the last 7 days has approached 31%. On May 21, 2022, the market value of Bitcoin was $558.6 billion, while as of June 19, it fell below 400 billion.
The continuation of the downward trend in the price of Bitcoin causes severe losses in other cryptocurrencies.
Ethereum, which is in the second place in terms of market value, has also lost more than 32% in the last week, falling below $1000.
It was noteworthy that the latest decline in the crypto money market came after the week of the highest decline in the last two years as a percentage, due to the increasing interest rates in the US stock market and the increasing recession risk in the economy.
In mid-May, after the cryptocurrency TerraUSD “collapsed” in value, rocking the crypto market, on June 13, Celsius Network, one of the largest crypto lenders, announced that it was halting all transactions due to “extraordinary market conditions”. This led to increased uncertainty in the market.
While the turbulence surrounding the Celsius Network and the views of central banks, especially the US Federal Reserve (Fed), that they will carry out the tightening process more aggressively, strengthened after the Fed’s 75 basis points increase last week, leading investors to avoid risky assets. Parallel to this, increasing uncertainties in the crypto sector continue to keep the crypto money market under pressure.
The number of employees was reduced by 18%
Cryptocurrency exchange Coinbase announced on June 14 that it will cut its workforce by 18%.
The layoffs are increasing uncertainty in the market as they are seen as a sign that companies do not expect a rapid recovery in the crypto market. On the other hand, it is noteworthy that some crypto miners are selling their holdings. Smaller companies in particular are experiencing financial difficulties and liquidating their Bitcoin holdings, as miners earn only 39% of their average revenue due to the falling Bitcoin price.
Analysts state that a prolonged bear market for cryptocurrencies is likely due to a “crisis of confidence” in the crypto market in this economic environment, with geopolitical uncertainties, high interest rates and the continued negative view of cryptocurrencies from leading lawmakers and the risk of the economy falling into recession.
Source: Trthaber / Translated by Irem Yildiz