- Bitcoin is down 67% from its all-time high of $69,000.
- Rising market fears amid heightened inflation coupled with failed institutions are driving price moves.
- Celsius Network paused all withdrawals, exchanges, and transfers from its cryptocurrency exchange.
Bitcoin fell to a fresh 52-week low below $23,000 during early trading today, down 67% from the all-time high of $69,000, sending panic across the market. What happened?
Earlier this year, Terraform Labs, the startup team behind the Terra ecosystem and USDT stablecoin, announced it would acquire $10 billion worth of bitcoin to fund its stablecoin reserves. These efforts quickly failed and Bitcoin was dumped on the market while participants in the Terra ecosystem watched their wealth ebb away.
Then last Friday, it was reported that the stock market had experienced its worst week this year since January, when the Dow Jones fell 900 points, causing futures contracts to fall sharply over the weekend.
Traditional market fears can easily be traced back to the upcoming Federal Open Market Committee (FOMC) meeting this Wednesday, where the Federal Reserve is expected to hike rates further, ultimately putting pressure on the broader economy as uncontrollable levels of debt harder to rise to bear and to be indebted becomes more expensive.
On Sunday, cryptocurrency exchange Celsius Network announced it would suspend all withdrawals, exchanges, and transfers from the platform to “stabilize liquidity and operations.” Celsius had invested a large portion of its holdings in the aforementioned Terra ecosystem and was badly affected by its collapse. Nansen, an on-chain analytics firm, reported a $420 million outflow during UST’s depegging event when Celsius crashed between May 7th and 10th.
Due to current market conditions, the largest company holding bitcoin, MicroStrategy, may soon need to further collateralize a $205 million bitcoin-backed loan it raised last month. It was reported at the time that the company could be called on if Bitcoin falls below $21,000 unless it further collateralizes the loan.
A loss of institutional confidence coupled with rising market fears has led to a cascading decline in market cap as financial markets bleed.