Bitcoin drops below $20,000 as crypto selloff quickens

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NEW YORK — The price of bitcoin fell below $20,000 on Saturday for the first time since late 2020, in a fresh sign that the selloff in cryptocurrencies is deepening.

Bitcoin, the most popular cryptocurrency, fell below the psychologically important threshold, dropping by as much as 12% to less than $18,100 by late afternoon on the East Coast, according to the cryptocurrency news site CoinDesk.

The last time bitcoin was at that level was in November 2020, when it was on its way up to its all-time high of nearly $69,000, according to CoinDesk. Many in the industry had believed it would not fall under $20,000.

Bitcoin lost more than 70% its value since its peak.

Ethereum was another cryptocurrency that has been falling in recent weeks. It took a similar plunge on Saturday.

This is the latest sign that the cryptocurrency industry is experiencing turmoil amid greater turmoil in the financial markets. Investors are selling riskier assets as central banks raise interest rates to combat rapid inflation.

The overall market value for cryptocurrency assets has fallen from $3 Trillion to below $1 Trillion, according to coinmarketcap.com. This company tracks crypto prices. According to the company’s data, crypto’s global market value was around $834 trillion on Saturday. A series of crypto meltdowns have erased tens billions of dollars in value from the currencies, prompting calls for regulation. Bipartisan legislation was introduced last week in the U.S. Senate to regulate digital assets. According to records and interviews, the crypto industry has increased its lobbying efforts. It has flooded $20 millions into congressional races this year, for the first-time.

Cesare Fraccassi, a professor of finance at the University of Texas at Austin, believes that Bitcoin’s falling below the psychological threshold isn’t a big deal. Instead, he suggested that the focus should be on news from lending platforms.

Cryptocurrency lending platform Celsius Network said this month that it was pausing all withdrawals and transfers, with no sign of when it would give its 1.7 million customers access to their funds. Babel Finance, another crypto lending platform, posted a notice on its website Friday saying that it would suspend all redemptions and withdrawals due to “unusual liquidity problems.” Fracassi stated that there is a lot volatility in the market. “And the reason why prices are going down is because there is a lot of concern the sector is overleveraged.”

The cryptocurrency exchange platform Coinbase announced Tuesday that it laid off about 18% of its workforce, with the company’s CEO and cofounder Brian Armstrong placing some of the blame on a coming “crypto winter.”

Stablecoin Terra imploded last month, losing tens of billions of dollars in value in a matter of hours.

Crypto was a common theme in popular culture prior to its recent downturn. Many Super Bowl ads featured the digital assets, while YouTube stars and celebrities regularly promoted it on social media.

David Gerard is a crypto critic and author of “Attack of the 50 Fee Blockchain.” He believes that regulators should have done more to monitor the industry in the past. He said that many young investors, especially those in their twenties, invested in crypto on the false hope that was offered to them.

“There is a real human victim here, and they are just ordinary people. “

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Chan reported from London.

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