In continuation of a downward trend in cryptocurrencies, Bitcoin fell below $19,000 on Saturday. During the last 24 hours, bitcoin has declined more than 9% to $18,642.22. Meanwhile, ether, the second-largest token, has dropped 10.54% to $963.22. This means a rapid rise in interest rates from the Federal Reserve and a tightening of liquidity conditions.
The lower #Bitcoin goes, the more I accumulate!
— Crypto Rover (@rovercrc) September 7, 2022
On Wednesday, the Fed raised rates to their highest level since 1994. Equities and bitcoin have pulled back from riskier assets as a result. After last month’s $60 billion crash of two major cryptocurrencies, the crypto space is still feeling the pain.
#Bitcoin price is less than a third of when I did this news hit and I stand by every word. Things have only gotten worse but Bitcoin is now on deep sale for when central banks are forced to re-liquify markets. pic.twitter.com/8ZA6DEwjpc
— Natalie Brunell (@natbrunell) September 7, 2022
It Is No Better for Stablecoins as Well
Several stablecoins, including Terra and Luna, plummeted to fractions of a penny. A crypto lender with $3 billion in assets froze withdrawals this week, locking away consumer assets and sparking bankruptcy concerns. With its many decentralized financial assets, Celsius acts as a bank that lends cryptocurrency to institutions.
Crypto hedge fund, worth $10 billion, is at risk of collapsing, according to reports. Among the cryptocurrency bets made by 3AC are bitcoin, ether, and SOLANA. The firm’s co-founder, Zu Shu, said it was in communication with appropriate parties. On Friday, 3AC’s CEO told The Wall Street Journal that the company is exploring assets sales and the possibility of a rescue by another company.
Trakx.io economist Ryan Shea suggests that the current digital asset stress is similar to natural selection in the natural world. As a result of the lack of a central bank, enterprises in the area are expected to become more responsible, and those that do not (high leverage, poor risk management, lacking security, etc.) will fail, Shea wrote in his research note. Despite its unpleasantness, it is a good thing that crypto doesn’t have a centralized backup because unlike fiat, crypto doesn’t offer bailouts.
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