Illustrative image of two commemorative bitcoins with a green background.
Arturo Widak | Nurfoto | fake images
Bitcoin briefly dipped below $21,000 in Asia on Tuesday before recovering slightly, continuing its slide as investors sold risky assets.
The world’s largest cryptocurrency is down around 7% and trading at $22,531.22 at around 05:13 a.m. ET, according to data from Coindesk. Bitcoin is trading at its lowest level since the end of 2020. Other digital currencies, including ether, also fell sharply.
The cryptocurrency market capitalization fell below $1 trillion on Monday for the first time since February 2021, data from CoinMarketCap showed. Around $200 billion has been removed from the market since Saturday.
“Everything is on fire right now, whether it’s stocks, crypto assets or anything,” said Nirmal Ranga, head of trading and technical analysis at cryptocurrency exchange ZebPay.
“What you’re seeing in the market is… fear, uncertainty and doubt. Technically the markets look oversold and there has to be some bottom that we’re going to hit in bitcoin in the near future,” he told CNBC’s “Street Signs.” . Asia.”
Crypto assets took a hit on Monday after crypto lending platform Celsius halted withdrawals, raising fears of a solvency problem at the firm that could spread to other parts of the market.
Celsius said that withdrawals, swaps and transfers between accounts would be halted due to “extreme market conditions” and that the move was intended to “stabilize liquidity and operations”.
“We are taking this action today to put Celsius in a better position to meet its retirement obligations over time,” the company said in a memo.
Then one of the world’s largest cryptocurrency exchanges, Binance, stopped the withdrawals.
Meanwhile, Binance, the world’s largest cryptocurrency exchange, halted bitcoin withdrawals for more than three hours “due to a stuck transaction causing a delay.”
Crypto lender BlockFi has also cut jobs as the impact of the market turmoil filters through businesses.
The cryptocurrency sell-off comes as investors generally shun risky assets amid fears of a potential global recession as major central banks around the world raise interest rates to control inflation.
Policymakers at the US Federal Reserve are now entertaining the idea of a 75 basis point rate hike later this week, according to CNBC’s Steve Liesman. That’s bigger than the 50 basis point increase many traders were expecting. The Wall Street Journal first reported the story.
Rising rates tend to make future earnings on growth assets look less attractive.
Bitcoin is down nearly 70% from its all-time high in November 2021.
– CNBC’s Arjun Kharpal contributed to this report.