Crypto industry gripped by anxiety as bitcoin wobbles near key $20,000 level

Cryptocurrency representations of Ripple, Bitcoin, Ethereum and Litecoin can be seen on the PC motherboard in this illustrated image on February 14, 2018. REUTERS / Dado Ruvic / File Photo

Hong Kong, June 20 (Reuters)-Cryptocurrencies as investors fear they could unleash a major shakeout if the contagion from the issue of a major cryptocurrency player is not contained The industry was at stake on Monday morning.

Bitcoin, which has lost 57% this year and 37% this month, fell below $ 20,000 on the weekend for the first time since December 2020. This level has symbolic implications as it was near the peak of the 2017 cycle.

The fall in prices follows the difficulties of some major industry players, as other crypto investors are forced to respond to margin calls and sell their holdings to cover losses. Further declines can have an impact.

Cryptographic hedge fund Three Arrows Capital is exploring options such as selling assets and bailouts by another company, its founder told The Wall Street Journal in an article published Friday. drawer. read more

Earlier this month, US-based lender Celsius Network announced that it would suspend its withdrawal. Many of the industry’s recent problems can be traced back to the remarkable collapse of the so-called Stablecoin TerraUSD in May. read more

Bitcoin was trading on either side of $ 20,000 on Monday, while the second token ether was $ 1,075, below its own iconic level of $ 1,000 over the weekend.

“If the market rises, everyone will sigh of relief, things will be refinanced, people will be fairer and all risks will be eliminated, but far lower from here it will be a complete storm. “I think it could be,” said Adam Farsing, Japan’s Chief Risk Officer for Crypto Liquidity Provider B2C2.

“If a lot of credit is withdrawn from the system and the lender has to absorb the losses from Celsius and the three arrows, they will reduce the size of future loan books. This is a crypto ecosystem. It means that the total amount of credits available in is high.

“It feels like 2008 in terms of how the domino effect of bankruptcy and liquidation is,” Farsing said.

Indeed, cryptocurrency developments are in line with the stock slide, as U.S. stocks suffered the largest weekly percentage decline in two years for fear of rising interest rates and the increased likelihood of a recession. increase.

Bitcoin prices tend to move in much the same way as other risk assets such as tech stocks.

Small cryptocurrencies are even more damaging than major cryptocurrencies as investors sought comparative security that the value of Bitcoin and Stablecoin is fixed at the value of traditional assets, most commonly the US dollar. I received it.

According to pricing site Coinmarketcap, the total market capitalization of cryptocurrencies is about $ 870 billion, down from the peak of $ 2.9 trillion in November 2021. read more

However, even the market capitalization of Stablecoin has declined in recent months, suggesting that investors are drawing money from the entire sector. read more

Tether, the world’s largest stablecoin, has a market capitalization of about $ 68 billion on Monday, down from $ 83 billion in early May.

Report by Alun John Edited by Shri Navaratnam

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