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Bitcoin eases from 18-month low as crypto market stabilizes

Forex Jun 15, 2022 07:35PM ET
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2/2 © Reuters. FILE PHOTO: A Bitcoin sign is displayed outside an automotive workshop where the cryptocurrency is accepted as a payment method in San Salvador, El Salvador, July 13, 2022. REUTERS/Jose Cabezas/File Photo 2/2

By Tom Wilson, Gertrude Chavez-Dreyfuss and Hannah Lang

LONDON/NEW YORK (Reuters) - Bitcoin recovered on Wednesday after diving to an 18-month low, buoyed by the U.S. Federal Reserve's tough stance on inflation even in the midst of a market meltdown this week after crypto lender Celsius froze customer withdrawals.

The world's largest cryptocurrency fell as much as 7.8% to $20,079.72, its lowest since December 2020. It has lost about 33% against the U.S. dollar since Friday, dropping more than 50% since the beginning of the year. It has slumped about 70% from its record high of $69,000 in November.

Bitcoin was last down 1.31% at $21,669.37.

The digital currency sector has been pummelled this week after Celsius froze withdrawals and transfers between accounts, stoking fears of contagion in markets shaken by the demise of the terraUSD and luna tokens last month.

Cryptocurrencies were buoyed as the S&P 500 rallied after a policy announcement by the Fed to raise interest rates, snapping a five-session losing skid.

The Fed raised its target interest rate by three-quarters of a percentage point, its biggest rate hike since 1994.

Crypto funds saw outflows of $102 million last week, according to digital asset manager CoinShares, citing investors' anticipation of tighter central bank policy.

The value of the global crypto market has tumbled 70% to under $900 billion from a peak of $2.97 trillion in November, CoinMarketCap data shows.

Graphic: Bitcoin so far in 2022 - https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwbwqapo/Bitcoin%20so%20far%20in%202022.png

"Some parts of the broader crypto ecosystem are facing a rather harsh reckoning," said Mikkel Morch, executive director at digital asset hedge fund ARK36. "As the reality of the bear market starts to settle in, the hidden leverages and structural weaknesses of projects that only worked when the prices went up are finally brought to light."

Celsius has hired restructuring lawyers and is looking for possible financing options from investors, the Wall Street Journal reported, citing people familiar with the matter. Celsius is also exploring strategic alternatives including a financial restructuring, it said.

Smaller cryptocurrencies, which tend to move in tandem with bitcoin, also fell. Ether, the second largest token, fell to as low $1,013, the lowest since January 2021, and was last down 1.22% at $1,172.76.

The chaos in the crypto market has spread to other companies, with a number of exchanges slashing workforces.

Major U.S. exchange Coinbase (NASDAQ:COIN) Global Inc said on Tuesday it would cut about 1,100 jobs, or 18% of its workforce. Gemini, another U.S. exchange, said this month it would cut 10% of its workforce.

Still, others continue to hire. Binance, the world's largest exchange, said it was hiring for 2,000 positions, and U.S. exchange Kraken said it had 500 roles to fill.

"Hunker down," tweeted Binance CEO Changpeng Zhao.

Crypto hedge fund Three Arrows, facing social media chatter it is facing liquidation issues, said it was committed to working things out.

U.S. crypto broker Genesis also sought to ease investor concerns, saying its balance sheet was strong and its lending business continued to meet client demand despite elevated market volatility.

Bitcoin eases from 18-month low as crypto market stabilizes
 

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Comments (13)
Michael Roal Casa
Michael Roal Casa Jun 15, 2022 2:50PM ET
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crypto currency is like chain letters (mail) or Ponzi schemes, the ones that started it make money the rest get scammed
Santosh Oak
Santosh Oak Jun 15, 2022 12:54PM ET
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Why do people want to buy ANY Crypto? Crazy. Most of them will lose& no one can do anything about it.
Donald Hancock
Donald Hancock Jun 15, 2022 9:37AM ET
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The crypto market has been in a bear market for months. The Celsius fiasco has just added some downside pressure. So far there is nothing to indicate that this is nothing more than a normal crypto bear market.  The two previous bear markets saw 85% pullbacks for Bitcoin. A similar percentage for this bear market would put Bitcoin down around $10k.  It's kind of funny, we hear the same thing every bear market. Crypto is dead! Bitcoin is dead! Crypto meltdown! 99% of the time this is from people who know nothing about crypto.
Stephen Smith
Stephen Smith Jun 15, 2022 9:09AM ET
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The pressure on leading cryptocurrencies came from fears that leading lender Celsius would become insolvent and followed an announcement on Monday that the firm would temporarily pause its operations. The low point has come almost exactly one month after the Terra Luna collapse rocked the market in May and will have left investors anxious to understand how much further it could tumble. https://worldabcnews.com/bitcoin-price-retreats-to-lowest-since-2020-can-it-go-down-ever-further-city-business-finance/
John Kim
John Kim Jun 15, 2022 8:43AM ET
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ripple? 70% down from the peak ain't a ripple ... it's more like a category 5 hurricane or 7.0 earthquake.
Tre Hsi
Tre Hsi Jun 15, 2022 8:43AM ET
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even at $20k, bitcoin is still like up 400%+ from 2 years ago, just to put into some perspective
ZS Beck
ZS Beck Jun 15, 2022 8:42AM ET
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The problem is None of these worthless coins is a hedge against inflation or “ digital gold”. Simple is that. It can fall way more.. Then people finally realize it's nothing else just a balloon 🎈.
Tre Hsi
Tre Hsi Jun 15, 2022 8:42AM ET
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it's not a hedge, crypto are far more volatile than stock market index. you can't even call them currencies, they are basically speculative assets
Sam Dur
Sam Dur Jun 15, 2022 5:56AM ET
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This Crypto turmoil seems to be driven some Govt, provably China, according to the Trading hours when it's pushed strongly by big volumes down. The "carrying for us" regulators, releasing draconic statements negatively impact as well. Hope the lawyers will investigate and sue the responsibles.
Charles Darwin
Charles Darwin Jun 15, 2022 5:56AM ET
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China? What are you talking about.......
Raja Tampan
Raja Tampan Jun 15, 2022 5:52AM ET
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so nice
jason xx
jason xx Jun 15, 2022 5:30AM ET
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What "investors" in their right mind would give Celsius any more money? They clearly lost the money that was supposed to be backing up people's accounts
Tre Hsi
Tre Hsi Jun 15, 2022 5:28AM ET
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well, you know the saying, when the tide receded you find out who is swimming naked, the tide seems to be going out for the crypto sector now
 
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