Bitcoin Falls Below $19,000
Bitcoin temporarily dipped below $19,000 on Thursday as the world’s largest digital currency remains under pressure from macroeconomic concerns and a liquidity crisis among high-profile cryptocurrency firms.
BTC was trading at $19,143.50, down 4% from the previous day. The digital currency is down over 58 percent this year and has dropped more than 70 percent from its all-time high of $68,990.90 in November. Bitcoin, like other assets, is still under pressure. The combination of high inflation, rising interest rates, and a recession strains cryptocurrencies.
Global stock markets are under pressure, with the S&P 500 in the United States on course for its worst first half-year performance since 1970.
Bitcoin is highly associated with the movement of equity indexes, particularly the Nasdaq. Stocks have been under pressure, which has dragged on bitcoin’s price. Investors are particularly concerned about the high level of inflation, which is pressuring global central banks to hike interest rates. It also fuels fears of a recession in the United States and other countries.
The crypto price drop exposed the industry’s highly leveraged structure and sparked a liquidity crisis across organizations.
According to a person familiar with the situation, three Arrows Capital, a cryptocurrency hedge fund, went bankrupt this week. The firm was exposed to the now-defunct terraUSD algorithmic stablecoin and its companion cryptocurrency luna. Three Arrows Capital, or 3AC, also failed to meet a margin call from BlockFi. A margin call occurs when an investor has to commit additional funds to avert losses on a deal done with borrowed funds.
Meanwhile, CoinFlex halted user withdrawals last week, citing “extreme market conditions.” In addition, CoinFlex CEO Mark Lamb stated that long-time cryptocurrency investor Roger Ver owed the company $47 million. Ver denies owing the exchange money.
The increase in day trading benefitted cryptocurrencies as well. Bitcoin has risen from $5,000 in March 2020 to more than $60,000 one year later. The currency has previously experienced such a rapid increase: in 2017, it more than doubled to a peak of $19,000. However, in the most recent boom, Ethereum, the number two cryptocurrency, rose even more impressively, from $120 to about $5,000 in 2021.
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