The virtual currency selling storm is still ongoing.On the afternoon of June 18th, Bitcoin briefly fell below $19000 per coin, continuing to hit a new low since December 2020
The virtual currency selling storm is still ongoing.
On the afternoon of June 18th, Bitcoin briefly fell below $19000 per coin, continuing to hit a new low since December 2020. Over the past 7 days, Bitcoin has fallen by 33%, Ethereum by 36%, and Coincoin (BNB) by 27%.
After the crisis of the stable currency UST and its sister token Luna in mid May, Celsius, a cryptocurrency lending giant with 1.7 million users, is also on the brink of danger. On Monday, Celsius announced that due to "extreme market conditions", the company will suspend all withdrawals, swaps, and transfers between accounts.
The market is concerned that TetherLimited, the world's largest stable currency issuer as a shareholder of Celsius, may be dragged down or trigger a "Lehman crisis" in the currency industry.
The global virtual currency selling trend continues! Bitcoin fell 33% within 7 days
At around 4 pm on June 18th, Bitcoin fell below $19000 per coin, continuing to hit a new low since December 2020. As of 9pm on June 18th, the price of Bitcoin was approximately $19171, a 24-hour decline of 7.41%, and a 33% decline in the past 7 days.
Since reaching a historical peak of $69000 per coin in November 2021, Bitcoin has depreciated by approximately 70%.
Bitcoin Price Trend on June 18th
The second largest cryptocurrency, Ethereum, also plummeted by 7.3% to $1000, the lowest level since January 2021. It fell nearly 80% from its previous peak.
According to Coinglas data, as of 23:00 on June 18th, a total of 77000 people in the digital currency sector have been exposed in the past 24 hours, with a total exposure amount of $270 million.
Former CEO of BitMEX, Arthur Hayes, previously stated that $20000 and $1000 respectively represent price support levels for Bitcoin and Ethereum, and if breached, it would trigger "significant selling pressure". In addition, Sam Callahan, a Bitcoin analyst at the Bitcoin Exchange Swan, also believes that based on previous bear market experience, Bitcoin may fall by more than 80% from its historical high. This means Bitcoin will drop to $13800.
According to CNN reports, analysts have stated that breaking below the $20000 mark would be a sobering milestone for the booming market during the pandemic. Craig Erlam, a senior market analyst at foreign exchange company Oanda, said in a report on Tuesday: "Falling below $20000 would be a huge psychological blow and could further weaken Bitcoin
Compared to other assets, the bear market of virtual currencies is particularly brutal. According to CoinMarketCap data, the total market value of the entire cryptocurrency market in November last year was $3 trillion, while the current total market value is about $844 billion. In just 7 months, $2.16 trillion has evaporated, shrinking by over 70%.
It is worth mentioning that the prices of virtual currencies led by Bitcoin continue to plummet, which has also hurt many coin circle investors. Compared to spending $1.5 billion on Bitcoin at the beginning of 2021, Tesla's investment losses have exceeded $600 million. Zhao Changpeng, the founder of the former "Chinese richest man" Coin On Exchange, lost $85.6 billion, or approximately 577 billion yuan, in about six months, a drop of 90%.
The "Lehman Crisis" in the Coin Circle Kicks Off?
Why have virtual currencies represented by Bitcoin been collectively sold by investors recently?
From a macro perspective, as major central banks around the world raise interest rates to control inflation, traders are selling riskier investments, including volatile cryptocurrency assets. A more important reason may be that some investors were unable to withdraw funds from some cryptocurrency exchanges this week, exacerbating investors' concerns about the liquidity of virtual currencies.
On Monday, Binance, the world's largest cryptocurrency exchange, suspended Bitcoin withdrawals for several hours, citing some transactions being "stuck" and causing a squeeze.
In addition, cryptocurrency lending giant Celsius, which has 1.7 million users, announced on Monday that it will suspend all withdrawals, swaps, and transfers between accounts due to "extreme market conditions". Celsius told its 1.7 million customers that it has decided to "stabilize liquidity and operations while taking measures to protect assets." Without specifying when to reopen the exchange, the bank stated that "it will take some time" before allowing customers to withdraw their deposits again.
According to the company's official website, as of May 17th, the company has assets worth $11.8 billion. Market analysis suggests that although there has been a significant decrease compared to over $26 billion in October last year, Celsius is still regarded by investors as a 'currency bank' in terms of scale.
According to media reports, Celsius has a significant position in the industry, claiming to have 1.7 million customers and promoting to users that they can earn an 18% profit margin through the platform. Users deposit their cryptocurrency on Celsius, which is then loaned to institutions and other investors, and users receive income from the income earned by Celsius. More importantly, according to Alex Mashinsky, the CEO of Celsius, they are involved in almost all major 'decentralized finance' agreements.
This means that after the crisis of the stable coin UST and its sister token Luna in mid May, Celsius, as a member of the coin banking industry, is also on the brink of danger. Some investors worry that if such large coin circle banks cannot reopen and allow withdrawals, there will be a chain reaction in the entire cryptocurrency market.
The market is more concerned about whether Tether Limited, as a shareholder of Celsius, the world's largest issuer of stable currency Tether, will be dragged down. If the Celsius crisis is compared to the "Bear Stearns incident" in the currency circle, then TetherLimited is a Lehman level presence in the currency circle.
TetherLimited is the largest operator in the stable currency field worth $180 billion, playing a key role in promoting transactions in the entire cryptocurrency market and providing connectivity with mainstream financial systems, equivalent to the financial infrastructure of the cryptocurrency circle. The so-called "stable currency" is a cryptocurrency whose market value is linked to the "stable" reserve assets such as the US dollar or gold. It serves as a pricing anchor and a trading medium in the cryptocurrency market.
For a long time, Tether has been one of the most scrutinized companies in the industry, and it is currently facing pressure from regulatory agencies, investors, economists, and an increasing number of skeptics. People are concerned that if Tether encounters problems, it may trigger a domino effect, leading to a greater collapse.
Hillary Allen, a financial expert at American universities, said, "Tether is really the lifeblood of a crypto ecosystem. If it implodes, it could cause the entire wall to collapse
Coin Circle Cold Winter
Since the beginning of this year, the coin industry has been buzzing with thunder, continuously staging a super storm.
On May 12th this year, the LUNA coin, once referred to as the "coin circle Maotai" by coin circle players, plummeted by over 99%. This cryptocurrency, which had reached a maximum of $119.5, fell to less than 3 cents on the same day, and the wealth of billions of dollars almost returned to zero.
According to CNN's report, the virtual currency industry is laying off workers to weather the "cold winter".
Coinbase, the largest cryptocurrency exchange in the United States, announced on Tuesday that it will lay off approximately 1000 employees, accounting for 18% of the total workforce. The reason is concern about the upcoming economic recession and the "encrypted winter". Its latest financial report shows a net loss of $430 million in the first quarter of 2022, compared to a net profit of $840 million in the previous quarter. Since its listing on NASDAQ in April last year, the company's stock has suffered a heavy blow. Once its highest market value was nearly $100 billion, now it is only less than $12 billion.
In fact, multiple peers have announced large-scale layoffs in recent weeks, including the cryptocurrency lending platform BlockFi, cryptocurrency trading platform Crypto.com, Gemini, and the Argentine based exchange Buenbit. Among them, Buenbit laid off 45% of its employees in May.
However, according to foreign media reports, as of now, the leaders of the coin circle are not too worried about the sharp decline in the coin circle. They say it's natural that the bear market of encryption technology is different from the bear market of stocks: the lows are more extreme, but the highs are also more extreme.
The bear market in cryptocurrencies typically drops by 85% to 90%, "said Jason Yanowitz, co founder of the cryptocurrency research platform Blockworks. He also stated that in the past decade, Bitcoin has experienced two lengthy cryptocurrency recessions, losing over 80% of its value, but Bitcoin has also rebounded time and time again.
During the crypto bear market from 2017 to 2018, Bitcoin plummeted 83%, from $19423 to $3217. But by 202111, the price of Bitcoin will exceed $68000 per coin.
On Friday (June 17th) local time, the Federal Reserve warned of the "structural fragility" of stable currencies in its semi annual monetary policy report to Congress. The report warns that the recent sharp declines and volatility in the stable currency and other digital asset markets highlight the structural fragility of this rapidly growing sector.
The report suggests that stable currencies without safety and sufficient liquid asset support, and not subject to relevant regulatory standards, will pose risks to investors and may have an impact on the financial system, including increasing the probability of destructive runs. At the same time, the lack of transparency in the risk and liquidity of assets that support stable currencies may further exacerbate these vulnerabilities.
Editor in Chief: Lin Gen
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