The price of bitcoin fell below $ 20,000 for the first time since late 2020 on Saturday, in a new sign that sales in cryptocurrencies are deepening.
Bitcoin, the most popular cryptocurrency, fell below the psychologically important threshold, falling as much as 9% to less than $ 19,000 and hovering around that brand, according to cryptocurrency news website CoinDesk.
The last time bitcoin was at that level was in November 2020, when it was heading for its high of nearly $ 69,000, according to CoinDesk. Many in the industry believed that it would not fall below $ 20,000.
Bitcoin has now lost more than 70% of its value since reaching that peak.
Ethereum, another widely followed cryptocurrency that has fallen in recent weeks, took a similar tumble on Saturday.
This is the latest sign of turmoil in the cryptocurrency industry amid growing turmoil in financial markets. Investors are selling riskier assets as central banks raise interest rates to curb accelerated inflation.
The overall market value of cryptocurrency assets has fallen from $ 3 trillion to below $ 1 trillion, according to coinmarketcap.com, a company that tracks cryptocurrency prices. On Saturday, the company’s data showed that crypto’s global market value stands at about $ 834 billion.
A spate of cryptocurrencies has wiped out tens of billions of dollars worth of value from the currencies, prompting urgent calls to regulate the free-flowing industry. Last week, bipartisan legislation was introduced in the U.S. Senate to regulate digital assets. The crypto industry has also stepped up its lobbying efforts – according to records and interviews, flooding $ 20 million for the first time this year in congressional racing.
Cesare Fracassi, a professor of finance at the University of Texas at Austin who leads the school’s Blockchain initiative, believes that Bitcoin’s fall below the psychological threshold is not a major problem. Instead, he said the focus should be on recent news from lending platforms.
Cryptocurrency lending platform Celsius Network said this month that it was interrupting all withdrawals and transfers, with no sign of when it would give its 1.7 million customers access to their funds. Another cryptocurrency lending platform, Babel Finance, said in a notice posted on its website on Friday that it would suspend redemptions and withdrawals on products due to “unusual liquidity pressures.”
“There is a lot of turmoil in the market,” Fracassi said. “And the reason prices are falling is because there is a lot of concern that the sector is being transferred.”
The cryptocurrency exchange platform Coinbase announced on Tuesday that it had laid off about 18% of its workforce, with the company’s CEO and co-founder Brian Armstrong putting some of the blame on an upcoming “crypto winter”.
Stablecoin Terra exploded last month, losing $ 10 billion in value in a matter of hours.
Crypto has permeated much of popular culture before its recent tumble, with many Super Bowl ads promoting the digital assets and celebrities and YouTube personalities regularly promoting it on social media.
David Gerard, a crypto-critic and author of “Attack of the 50 Foot Blockchain,” said the recent crashes show a failure by regulators, who he believes should have done more research into the industry years ago. Many budding investors – especially young people – have invested in crypto based on a false hope sold to them, he said.
“Here are real human victims who are ordinary people.”