Interstellar money: Or how the greatness of Bitcoin from 2017 fades to return or disappear

Interstellar money: Or how the greatness of Bitcoin from 2017 fades to return or disappear

Interstellar money: Or how the greatness of Bitcoin from 2017 fades to return or disappear
Interstellar money: Or how the greatness of Bitcoin from 2017 fades to return or disappear
Type: Thoughts
1655903734 22 Jun / 13:15

The crypto industry is preparing for severe consequences after the collapse over the weekend.

Bitcoin falls to $17,628 under pressure from rising central bank interest rates. But this is not the only crisis that is looming.

Over the past few days, rising temperatures at CeFi lender Celsius saw CEO Alex Mashinsky feverishly hit back at public accusations of insolvency.

Now the market is battering amidst skyrocketing inflation and a liquidity crisis which has Celsius in the spotlight.

The public now believes that despite claiming “military-grade security” and “next-level transparency,” Celsius has been gambling user deposits through on-chain leverage, accumulated illiquid ETH, and getting rekt just like the rest of us. But let’s look at the problem at its roots.

Crypto investors and managers are preparing for more issues after the price of Bitcoin collapsed over the weekend and worsened the credit crunch affecting the industry, writes the Financial Times.

Bitcoin, the world’s most widely traded cryptocurrency, fell to $17,628 before rising, according to CryptoCompare.

Investors and managers are anxiously watching the token’s price, fearing that a drop below $20,000 may necessitate the liquidation of large leverage bets.

Bitcoin, a significant benchmark for the overall crypto market, has come under intense pressure in recent months as central banks and governments reject long-standing ultra-low interest rate policies and move to higher rates to fight inflation.

“The crypto market is facing a dark winter, as the era of easy money is ending, and there was another brutal sale this weekend. Risky assets are thrown out the window, “said Dan Ives, CEO, and analyst at Wedbush Securities.

Demand for lucrative deals has shifted as US Federal Reserve-led central banks raise interest rates on loans and suspend efforts to stimulate pandemic growth.

Тhis month the traditional financial markets were rocked, and traders were worried that aggressive action could slow global growth and even cause a recession. Last week was the worst for assets worldwide since the pandemic began in March 2020.

Bitcoin lost 70% from its highest level of nearly $70,000 last November, falling below $20,000 on Monday. Ether, another commonly traded token, fell to $900 over the weekend, meaning its price has fallen 75 percent in the past year.

These circumstances have led to a credit crunch in the digital asset industry, affecting many of the most critical assets.

Last month, the so-called stablecoin Terra and its subsidiary token Luna, popular with crypto investors looking for high profits, collapsed. At the same time, two crypto lending platforms froze withdrawals for consumers, and the crypto hedge fund Three Arrows failed to respond to creditors’ margin claims.

The weekend sell-off liquidated more than $600 million in leverage, according to Coinglass, after traders who had borrowed money to make market bets failed to provide collateral and were liquidated.

Analysts expect these losses will increase tensions over market traders and lenders’ balance sheets due to the large number of consumers who have taken out loans against their crypto assets as collateral.

However, Dogecoin, the cryptocurrency joke, increased in value after Elon Musk, CEO of electric car maker Tesla, tweeted, expressing continued support for the token.

Nayib Bukele, president of El Salvador and a defender of Bitcoin, told investors to “stop looking at charts and enjoy life.” Bukele, who made bitcoin the official currency of El Salvador last year, rejected IMF warnings against its policies.

Problems in crypto markets also affect traditional financial markets. The American company MicroStrategy – a technology group that is one of the largest investors in Bitcoin, has collapsed by almost 70 percent this year. Shares of cryptocurrency diggers, who charge fees to validate crypto transactions, have also fallen sharply.

The crypto platforms, at the heart of the relentless collapse, have been forced to withdraw some of the jobs they offer. The list includes Coinbase, Gemini, Mercado Bitcoin – a popular platform in South America – and rival Celsius BlockFi, which fired 20% of its staff this month.

According to CryptoTeka, quite exciting times are coming and “Crypto Winter” will come in the middle of summer, and inflation will again determine the markets. Unfortunately, these inter-currency games remain consequences in the lives of ordinary people.

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