On Saturday, the value of Ethereum, another highly watched cryptocurrency that has been declining over the last several weeks, continued its downward trend. The value of ether, which is backed by Ethereum, has dropped by 74 percent. After surpassing $1,000, the price of ether plunged over 19 percent to $891, reaching its lowest point since January 2021. The two cryptocurrencies that are seen as the market’s leading indicators have both dropped by more than 70 percent from their respective all-time highs, which were reached in early November. According to coinmarketcap.com, which monitors cryptocurrency prices, the entire market worth of cryptocurrency assets has dropped from $3 trillion to less than $1 trillion. This information comes from a decline in the value of cryptocurrency markets. According to the statistics provided by the business, the value of the global cryptocurrency market was around $840 billion as of Sunday morning.
The failure of the Terra blockchain one month ago was the first indication of broader strain, and this week’s news that cryptocurrency lender Celsius Network Ltd. has decided to cease withdrawals was the last straw that broke the camel’s back. To add fuel to the fire, a cryptocurrency hedge fund known as Three Arrows Capital said this week that it had experienced significant losses and was contemplating a bailout or the sale of its assets, while another lender known as Babel Finance followed in the footsteps of Celsius this week.
Bitcoin’s value has taken a beating this week as a result of the cryptocurrency loan business Celsius’s decision to halt withdrawals and transfers between accounts, as well as the fact that other cryptocurrency companies have begun firing personnel. Coinbase has revealed that the company has terminated the employment of around 18 percent of its workers. CEO and cofounder Brian Armstrong has placed part of the blame on an impending “crypto winter.” In addition, businesses like Global Inc., Gemini, and BlockFi have announced that they would be eliminating the jobs of thousands of staff because investors are selling hazardous assets. In addition to this, there were rumors that a bitcoin hedge fund had gotten into some kind of problems.
The changes have taken place at the same time as a decrease in equity prices, with US stocks suffering their worst weekly percentage loss in two years on worries of rising interest rates and the increasing risk of a recession. Due to the fact that central banks are increasing interest rates in order to battle the accelerating inflation, investors are selling off riskier assets. Rising interest rates have the potential to reduce inflation, but they also increase the likelihood of a recession by making it more expensive for individuals and companies to get credit and by causing a decline in the value of financial assets such as stocks, bonds, and cryptocurrencies.
The chief executive officer of DoubleLine Capital, Jeffrey Gundlach, said that he would not be shocked if the price of bitcoin dropped below $10,000. A critic of cryptocurrencies and author of the book “Attack of the 50 Foot Blockchain,” David Gerard, stated the current meltdowns demonstrate a failure on the part of authorities, who, in his opinion, should have placed greater scrutiny on the business years ago.
According to him, a great number of novice investors, particularly young people, made investments based on a delusional hope that was peddled to them: “There are actual humans, everyday people, who have been harmed as a result of this.” Alex Diaz, the administrator of a Facebook group for Bitcoin enthusiasts, he believes that the crash in the value of bitcoin is not the fault of bitcoin but rather of parallel developments in the cryptocurrency space, some of which are “just schemes or outright scams.” Alex Diaz made this statement.
Diaz said that “all that will be required to recuperate is simply time.”