Bitcoin holds near $20,000 as investors fear “domino effect”

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The cryp­tocur­ren­cy indus­try was on edge on Mon­day as bit­coin held just above $20,000 and investors feared that prob­lems at major cryp­to play­ers could unleash a wider mar­ket shakeout.

Bit­coin, the world’s biggest cryp­tocur­ren­cy, dropped on Sat­ur­day to as low as $17,592.78, falling below the key $20,000 lev­el for the first time since Decem­ber 2020.

It picked up slight­ly dur­ing Lon­don trad­ing hours on Mon­day, at around $20,510 at 1232 GMT. But it has still lost 55% of its val­ue this year and 35% this month alone in the cryp­tocur­ren­cy sector’s lat­est meltdown.

Bitcoin’s fall fol­lows prob­lems at sev­er­al major cryp­to firms. Fur­ther declines, mar­ket play­ers said, could have a knock-on effect as oth­er cryp­to investors are forced to sell their hold­ings to meet mar­gin calls and cov­er losses.

Cryp­to hedge fund Three Arrows Cap­i­tal is explor­ing options includ­ing the sale of assets and a bailout by anoth­er firm, its founders told the Wall Street Jour­nal in a sto­ry pub­lished Fri­day, the same day Asia-focused cryp­to lender Babel Finance said it would sus­pend withdrawals.

“We’ve like­ly seen the worst of things in terms of any sin­gu­lar enti­ty suf­fer­ing, but most in the indus­try are braced for more to come,” said Joseph Edwards, head of finan­cial strat­e­gy at fund man­age­ment firm Sol­rise Finance.

U.S. based lender Cel­sius Net­work this month said it would sus­pend cus­tomer with­drawals. In a blog on Mon­day https://blog.celsius.network/a‑note-to-the-celsius-community-e5af1f5a7998, Cel­sius said it would con­tin­ue work­ing with reg­u­la­tors and offi­cials, but that it would pause its cus­tomer Q&A sessions.

“There is a lot of cred­it being with­drawn from the sys­tem and if lenders have to absorb loss­es from Cel­sius and Three Arrows, they will reduce the size of their future loan books which means that the entire amount of cred­it avail­able in the cryp­to ecosys­tem is much reduced,” said Adam Far­thing, chief risk office for Japan at cryp­to liq­uid­i­ty provider B2C2.

“It feels very like 2008 to me in terms of how there could be a domi­no effect of bank­rupt­cies and liq­ui­da­tions,” Far­thing said.

Small­er tokens, which usu­al­ly move in tan­dem with bit­coin, were also hurt. No.2 token ether was at $1,129, hav­ing dipped below its own sym­bol­ic lev­el of $1,000 over the weekend.

The fall in cryp­to mar­kets has coin­cid­ed with a slide for equi­ties, as U.S. stocks suf­fered their biggest week­ly per­cent­age decline in two years on fears of ris­ing inter­est rates and the grow­ing like­li­hood of recession.

Bitcoin’s moves have tend­ed to fol­low a sim­i­lar pat­tern to oth­er risk assets such as tech stocks.

The over­all cryp­to mar­ket cap­i­tal­i­sa­tion is rough­ly $950 bil­lion, accord­ing to price site Coin­mar­ket­cap, down from a peak of $2.9 tril­lion in Novem­ber 2021.

A fall in sta­ble­coins – a type of cryp­to designed to hold a steady val­ue – is also sug­gest­ing investors are pulling mon­ey from the sec­tor as a whole.



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