RIYADH: Cryptocurrencies plummeted in the market with Bitcoin falling below $19,000 and Ether dropping past $1,000, as fears of a broad economic recession are looming over business verticals.
Bitcoin, the world’s leading cryptocurrency fell 9.57 percent on Sunday, and is being traded at $18,459 as of 07.53 a.m Saudi time.
Ethereum, the second most traded cryptocurrency is priced at $963, down 10.60 percent, according to data from Coindesk.
A Bloomberg report revealed that Bitcoin’s value drastically plummeted by 15 percent on Saturday, and at one point in time, it reached $17,599. Ether fell as much as 19 percent to $881 on Saturday, the lowest since January 2021.
Data from Coinglass suggested that total liquidations in the Crypto market were around $566 million in the last 24 hours, with Bitcoin and Ether at around $271 million and $192 million respectively.
Bitcoin has now lost almost 70 percent of its value since it reached its peak in November 2021, when the virtual currency was valued at over $68,000.
The cryptocurrency industry has seen turmoil amid wider turbulence in financial markets — this past week was Wall Street’s worst since 2020, during the early days of the coronavirus pandemic.
Investors are selling off riskier assets because central banks are raising interest rates to combat quickening inflation. Higher rates can help bring down inflation, but they also heighten the chances of a recession by increasing borrowing costs for consumers and businesses and pushing down prices for stocks, and other investments like cryptocurrencies.
The overall market value of cryptocurrency assets has fallen from $3 trillion to less than $1 trillion, according to coinmarketcap.com, which tracks crypto prices. As of Saturday afternoon the company’s data showed crypto’s global market value stood at about $816 billion.
A spate of cryptocurrency meltdowns has sparked urgent calls to regulate the freewheeling industry, and last week bipartisan legislation was introduced in the US Senate to regulate the digital assets. The industry has also upped its lobbying efforts, flooding $20 million into congressional races this year for the first time, according to records and interviews.
Cesare Fracassi, a finance professor at the University of Texas at Austin who leads the school’s Blockchain Initiative, believes bitcoin’s fall under the psychological threshold isn’t a big deal. Instead, he said the focus should be on recent news from lending platforms.
One of them, 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. Another platform, Babel Finance, said in a notice posted online Friday that it would suspend redemptions and withdrawals on products due to “unusual liquidity pressures.”
“There is a lot of turbulence in the market,” Fracassi said. “And the reason why prices are going down is because there is a lot of concern the sector is overleveraged.”
Cryptocurrency exchange platform Coinbase announced Tuesday that it had laid off about 18 percent of its workforce, with CEO and co-founder 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 had permeated much of popular culture before its recent tumble, with Super Bowl ads touting the digital assets and celebrities and YouTube personalities routinely promoting it on social media.
David Gerard, a crypto critic and author of “Attack of the 50 Foot Blockchain,” said the recent meltdowns show a failure by regulators, who he believes should have put more scrutiny on the industry years ago.
Many nascent investors — especially young people — invested based on a false hope that was sold to them, he said: “There are real human victims here that are ordinary people.
Alex Diaz, the administrator of a Facebook group for Bitcoin enthusiasts, said he believes the bitcoin crash is not the fault of bitcoin but of parallel developments in the cryptocurrency space, some of which are “just schemes or outright scams.”
“What it will take to recover is just time,” Diaz said.
(With inputs from AP)