Bitcoin staggers on interest rate hike… Retreats to $17,700
Last weekend, the cryptocurrency market was hit by a storm after the interest rate hike. On the 19th, as the psychological and technical support level of $20,000 collapsed, Bitcoin pushed back to the $17,700 level.
On the 15th (local time), the Federal Reserve (Fed), the central bank of the United States, took a ‘giant step’ to raise interest rates by 0.75 percentage points at a time. It was the largest increase in 280,000 years.
Immediately after the announcement of the rate hike, the market, where uncertainty was resolved, rose slightly as if reassured. However, the cryptocurrency market plunged once again over the weekend as selling volumes poured in on concerns about long-term inflation and interest rate hikes.
On the 19th, Bitcoin fell to $17,744 and Ethereum to $897.59. In just one day on the 20th, they rose more than 10% and recovered to the $20,000 and $1,000 levels, respectively.
As the market price plummeted, the total market capitalization of cryptocurrencies also plummeted. The total market capitalization of cryptocurrencies, which recorded $2.968 trillion in November last year, has fallen by 70%, maintaining the level of $909.9 billion.
Cryptocurrency skeptics raised their voices again on the 19th, when the market crashed. Economist Peter Schiff tweeted on the same day: “The cryptocurrency industry is dead, and it will make the economy healthy.”
New York University professor Nouriel Roubini said, “1000 Jobcoins lost 99% of their value and disappeared, and even the top 10 cryptocurrencies lost 80 to 90% of their peak. he criticized
◇The shaking cryptocurrency market
Macroeconomic pressures are causing ruptures in the cryptocurrency industry as well. As the cryptocurrency market fell, bad news continued, such as suspension of withdrawals, margin calls, and forced liquidation of cryptocurrency lenders that promised high returns.
Last month, the collapse of TerraUSD (UST), the top 10 stablecoin by market cap, and the linked token Luna, already shook the market once. Celcius, a large cryptocurrency lending company, announced on the 13th to suspend withdrawals due to ‘extreme market conditions’ and Babel Finance on the 17th due to ‘abnormal liquidity pressure’.
Three Arrows Capital (3AC), a cryptocurrency hedge fund that managed $3 billion in funds in April, received loans from institutions and made huge investments in Luna and Terra, and is said to be on the verge of bankruptcy. .
The Block, citing a source, reported that FTX, Deribit, and BitMEX have liquidated positions in 3AC, which failed to respond to margin calls. The Wall Street Journal reported that 3AC is considering an asset sale and bailout request to address the situation.
There are concerns that the bankruptcy of such large players could spread negative effects to other cryptocurrency lending companies and affiliated markets. There are also observations that the crisis will worsen if mass holding institutions such as MicroStrategy shake off their stake in cryptocurrencies.
MicroStrategy bought 129,218 Bitcoins at a flat price of $30,700. On the 16th, when Bitcoin was around $21,000, the loss had already exceeded $1 billion.
Long-term owners were also found to have been sold. Bitcoin miners sold 88,000 BTC, an all-time high, last Wednesday, according to Yahoo Finance. Mining profits fell by 80% compared to November.
◇Cryptocurrency can be recovered only when the macro economy is revived
It rose as low-priced buys started following the weekend crash, and Bitcoin broke its downtrend in 12 days. However, as the psychological support level of $20,000 has been broken, market anxiety has not subsided. Alternative’s cryptocurrency fear and greed index, which represents investor sentiment, is in the ‘extreme fear’ stage as of 10:40 am on the 20th, with a score of 9.
As the continuous interest rate hike and quantitative tightening are predicted, and investor sentiment for all risky assets including stocks has greatly contracted, it is difficult to see a dramatic reversal of the uptrend unless macroeconomic conditions improve.
On the other hand, people in the cryptocurrency industry continue to support cryptocurrency.
El Salvador’s President Nayves Bukele, who declared Bitcoin as a fiat currency last year, tweeted, “Investing in Bitcoin is all about patience. It will grow,” he said.
Renowned Canadian entrepreneur Kevin O’Leary told Insider recently that “investors will have to endure price volatility and some project collapse over the long term,” and “will not sell their holdings.” Binance CEO Changpeng Zhao said, “Historically, if you bought Bitcoin whenever the headline that Bitcoin is dead, you would have done well.
alice@tokenpost.kr
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