Crypto panic as digital assets follow share prices in a downward spiral
The cryptocurrency market could do with some respite but its convention-breaking nature means there is no hiatus. Trading in digital assets such as bitcoin and ethereum runs 24/7, unlike their conventional peers in equities on the New York and London stock exchanges, which at least get the weekend off.
So one torrid week tends to run into another for this most cutting-edge of markets. Bitcoin – the cryptocurrency cornerstone – fell below the key level of $20,000 on Saturday morning, meaning it has dropped 34% in the past seven days, according to CoinGecko, which showed that ethereum, the other pillar of the market, had fallen 40% to $994 in the same period. There are fears bitcoin’s fall will trigger more sell-offs, leading to another tumultuous seven days for digital assets.
The entire crypto market fell below $1 trillion last week, a precipitous decline from its peak of $3tn in November last year. A number of factors drove the declines – a mix of crypto-specific events and wider macroeconomic issues – and some of them will continue to hang over the market this week as well.
On Monday the cryptocurrency lending platform Celsius Network halted withdrawals because of “extreme market conditions”, prompting a sell-off. Celsius, a bank-like business that offers customers high interest rates on their cryptocurrency deposits, has yet to lift restrictions on withdrawals or announce a resolution of its problems.
Three Arrows Capital, a cryptocurrency hedge fund that makes highly leveraged bets on crypto assets, is also thrashing out its future after being hit hard by the digital assets sell-off. Amid rumours of insolvency, last Wednesday, Zhu Su, the Dubai-based investor behind Three Arrows, tweeted that “we are in the process of
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