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Bitcoin fell below $20,000 for the first time since December 2020, as evidence of escalating stress in the crypto industry mounts against the backdrop of monetary tightening.
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In the early hours of Saturday, Bitcoin slid as much as 6% to $19.3K. The most valuable cryptocurrency in terms of market capitalization has been falling for the past 12 days. Ether momentarily broke under the $1K mark at the time of writing this report, its lowest level since January 2021, before recovering. Fears of a recession are suffocating enthusiasm
Recall some days ago, the Federal Reserve hiked its key interest rate by three-quarters of a percentage point, the largest increase since 1994, and monetary policymakers indicated that they will continue to hike aggressively this year in the fight against inflation.
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A higher-rate environment has harmed riskier assets like cryptocurrency, contributing to Bitcoin’s 70% drop from its all-time high in November.
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After last month’s collapse of the Terra blockchain and the subsequent move by crypto lender, Celsius Network Ltd. to restrict withdrawals, a market that began falling late last year on predictions of a less flexible Fed is now showing symptoms of widespread turmoil. Three Arrows Capital, a crypto hedge fund, incurred big losses and said it was shutting down, adding to the gloom.
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