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Bitcoin falls below $20,000 as crypto sell-off accelerates | corporate finance

NEW YORK (AP) — Bitcoin fell below the psychologically important $20,000 mark on Saturday for the first time since late 2020, in a renewed sign that the cryptocurrency sell-off is deepening.

According to cryptocurrency news site CoinDesk, the price of the most popular cryptocurrency had fallen as much as 9.7% to less than $18,600 by late afternoon on the east coast. It was below $18,000 at some points throughout the day.

The last time bitcoin was at these levels was in November 2020, when it was on track to an all-time high near $69,000, according to CoinDesk. Many in the industry had thought it wouldn’t drop below $20,000 again.

Bitcoin has now lost more than 70% of its value since it peaked.

Ethereum, another widely used cryptocurrency that has tumbled in recent weeks, experienced a similar tumble on Saturday.

The cryptocurrency industry has seen turmoil amid major turmoil in financial markets – last week was Wall Street’s worst since 2020, in the early days of the coronavirus pandemic.

Investors are selling riskier assets as central banks raise interest rates to combat accelerating inflation. Higher interest rates can help bring down inflation, but they also increase the likelihood of a recession by raising the cost of borrowing for consumers and businesses, and depressing the prices of stocks and other investments like cryptocurrencies.

The total market value of cryptocurrency assets has fallen from $3 trillion to less than $1 trillion, according to coinmarketcap.com, which tracks crypto prices. As of Saturday afternoon, the company’s data showed that the global market value of crypto was around $816 billion.

A spate of cryptocurrency collapses has sparked urgent calls for regulation of the freewheeling industry, and bipartisan legislation to regulate digital assets was introduced in the US Senate last week. The industry has also ramped up its lobbying, pouring $20 million into convention races for the first time this year, according to records and interviews.

Cesare Fracassi, a finance professor at the University of Texas at Austin who leads the school’s blockchain initiative, believes Bitcoin’s fall below the psychological threshold isn’t a big deal. Instead, he said the focus should be on the latest news from lending platforms.

One of them, Celsius Network, said this month that it was pausing all withdrawals and transfers with no indication of when it would give its 1.7 million customers access to their funds. Another platform, Babel Finance, said in a notice published online on Friday that it would suspend product redemptions and withdrawals due to “unusual liquidity pressures”.

“There is a lot of turbulence in the market,” Fracassi said. “And the reason prices are falling is because there are many concerns that the sector is overleveraged.”

Cryptocurrency exchange Coinbase announced on Tuesday that it has laid off about 18% of its workforce, with CEO and co-founder Brian Armstrong blaming some of the blame on an upcoming “crypto winter.”

Stablecoin Terra imploded last month, losing tens of billions of dollars in value in a matter of hours.

Crypto had permeated much of popular culture prior to its recent downfall, with Super Bowl ads touting the digital assets and celebrities and YouTube personalities routinely promoting it on social media.

David Gerard, a crypto critic and author of Attack of the 50 Foot Blockchain, said the recent meltdowns demonstrate a failing by regulators, who he says should have scrutinized the industry years ago.

Many aspiring investors – especially young people – invested on the basis of a false hope that was sold to them, he said: “There are real human victims here, who are ordinary people.

Alex Diaz, the admin of a Facebook group for bitcoin enthusiasts, said he believes the bitcoin crash is not the fault of bitcoin but of parallel developments in the cryptocurrency space, some of which are “just schemes or outright fraud.” be.

“What it takes to recover is just time,” Diaz said.

Chan reported from London. Associated Press journalist Leah Willingham in Charleston, West Virginia, contributed to this report.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, transcribed or redistributed without permission.

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