Bitcoin price drops below $18,300 as sell-off accelerates

Bitcoin plunged to $ 18,248, and ether fell to $ 944 on Friday evening, as sales in the crypto market accelerated. Two of the world’s most popular cryptocurrencies were down more than 35% in the past week, as both violated symbolic price barriers.

The massacre in the crypto market was partly driven by pressure from macroeconomic forces, including spiral inflation and succession of Fed interest rate hikes. We have also seen these blue chip cryptos track lower equity. It didn’t help crypto companies have laid off many employeesand some of the most popular names in the industry are facing solvency meltdowns.

That’s how we got here.

In the chaos, Celsius, a crypto staking company and major lender, surprised the market when it announced that all withdrawals, swaps and transfers between accounts had been suspended due to “extreme market conditions.” In the memo addressed to the Celsius Community, the platform also said the move was designed to “demonstrate liquidity and operations.”

Celsius is effectively locked $ 12 billion crypto assets under management, raising concerns about platform solvency. The news spread across the crypto industry, recalling some of the events in May, when a The failed US dollar-pegged stablecoin project lost $ 60 billion in value and dragging the crypto industry further down.

Celsius is known for offering users returns this is 18.63% in their deposits. It’s like a product that a bank would offer, except there is no regulatory protection.

The insane high yields are finally under scrutiny.

“This risk certainly seems like just the beginning,” ujare John TodaroNeedham’s vice president of crypto assets and blockchain research.

“What I would say is on the decentralization side – a lot of these DeFi protocols, a lot of those positions are secured, so you don’t have to see the lack of funds that can happen with centralized borrowers and lenders. You can still see a lot of liquidation with the securities sold. in the DeFi protocol, ”continued Todaro.

Coinbase announce it eliminating almost a fifth of the workforce due to crypto volatility. The company previously cut spending and even canceled a job offer in hopes of stabilizing its business.

“We have a recent inflation report coming out that I surprised a lot of people,” said President and Chief Operating Officer Emilie Choi.

“We’ve had Jamie Dimon and others talking about the economic storm that’s coming and because of what’s happening in the economy, it’s been the wisest thing to do now,” Choi said.

Crypto companies across the board are looking for ways to reduce costs, as investors roll out of the most risky assets, reducing trading volumes.

Crypto.com broke up announced a staff reduction of 260 peoplelike Gemini, which he says will Retrenchment of 10% of the workforce – the first for a U.S.-based cryptocurrency and custodian exchange.

MicroStrategy CEO Michael Saylor appeared on CNBC Wednesday morning to discuss concerns around the firm, which has made a $ 4 billion bet on bitcoin. Saylor has spoken on the double company is the first and only bitcoin exchange fund in the USso invest in the nearest MicroStrategy you will get a bitcoin spot ETF.

MicroStrategy has been using corporate debt to buy bitcoinand in March, Saylor decided to take another step toward the normalization of bitcoin -supported finances during his tenure borrowed $ 205 million using bitcoin as collateral – to then buy more of the cryptocurrency.

“We have a $ 5 billion bond. We borrowed $ 200 million. So I’m not telling people to go out and take out a lot of debt. The financing industry is bitcoin-backed,” he said. ujare Saylorwhich adds that crypto miners are publicly traded Marathon Digital Kab also taking out a line of credit with Silvergate Bank.

As bitcoin prices tanked this week, investors worried the company would be asked to put up more bonds for loans, but Saylor said fears were overblown.

“Margin calls are nothing,” Saylor told CNBC earlier this week. “It just made me famous on Twitter, so I appreciate that … We feel like we have a fortified balance sheet, we’re comfortable, and debt margins are well managed.”

Then on Wednesday evening, at The Federal Reserve raised its reference interest rate three -quarters of a percentage point the most aggressive rise since 1994. The Fed said the move was made in an effort to curb sky-high inflation.

Crypto prices initially rose in the news as investors hoped to avoid a recession, but the rally didn’t last long.

“I think we’re in a long withdrawal period here,” Jill Gunter, co-founder & CEO of Espresso Systems, said. told CNBC’s Squawk on the Street.

“I think we’ve taken the elevator down, and I think that we, as an industry, need to take the stairs back and climb out by building real utilities,” he said.

Gunter says that, in many ways, what we’re looking at is a “healthy washout.”

“One doesn’t want to, as a builder, be an investor for the long term … in a market driven by short -term price action, with speculation, like, honestly, crypto. The market has been booming over the past few years,” Gunter said.

“We are experiencing financial instability because of this opaque influence, you never know where all of these risks are increasing,” Paxos CEO & Co-Founder Charles Cascarilla to CNBC.

“In some ways, this is just an old story. You borrow short and borrow long. And I’m really unfortunate that people lose money, and I think it will, in some ways, set back the space, because you’ll lose some early users or some people who just arrived at the place, ”continued Cascarilla.

But Cascarilla also said that investors are still looking for quality crypto investments.

“The basic technology here and the adoption curve that we’re looking at, the institutions that are coming, how the financial system can be used quickly on the internet, that’s what needs to happen,” he said.