Kategorie: Crypto News

The crypto market has witnessed a massive price meltdown over the crypto winter, with the total market cap of all cryptocurrencies shrinking by a whopping $2 trillion.

Most assets have seen their prices slashed from bull market peaks – see Bitcoin struggle to stay above $20,000 after dropping from highs above $69,000, or Ethereum bulls battling to keep $1,000 after testing $4,800 in November.

The market recoiled loudly as cryptocurrency Terra (LUNA) and the algorithmic stablecoin TerraUSD (UST) collapsed, wiping billions of dollars’ worth of investors’ money off the face of the Earth.

Crypto meltdown’s main culprit

While investors saw UST’s march to zero and a market cycle wreak havoc on prices, the main culprit is the over-leveraging that characterized the bull market environment in 2020 and 2021.

Nik Bhatia, the founder of The Bitcoin Layer, told CNBC in an interview that the market going into a tailspin could also be traced to the macro environment that had aggressive interest rates from central banks and the end of easy money amid inflation.

But Bhatia, an adjunct professor of finance at University of Southern California (USC), says the shockwaves that hit investors and crypto companies amid the severe bear market is more down to leverage and perhaps the presence of some “bad actors” within crypto than these other factors.

The implosion linked to Terra and Three Arrows Capital aside, the analyst says there were “Ponzi-type” tendencies that characterized the activities of crypto lenders like Celsius.

“…they were attracting depositors with high yields just so they could pay down the yield they had promised their existing investors,” he noted.

He says Celsius’ collapse was due to the broader “misallocation of capital within DeFi,” with investors bent on securing high yields without knowing exactly where the huge interests came from.

The Bitcoin Layer founder added that the blind allocation of capital is what led to the tailspin. If investors did this without leverage, then the impact would be on their portfolios. 

However, going into it at staggeringly high leveraged positions only means the domino would be even more destructive.

You can watch Nik Bhatia’s interview with CNBC here.

The post Crypto meltdown: The Bitcoin Layer founder points to leverage as main culprit appeared first on CoinJournal.

Bitcoin price slipped below $20,000 on Wednesday after headline US inflation data showed the consumer price index (CPI) came in hotter than expected.

Data by the US Labor Department showed CPI rose 9.1% year-over-year for the hottest move since 1981 and 1.3% month-on-month in June, the fastest since 2005. 

The data came in hotter than the estimated 1.1% month-on-month and 8.8% year-over-year, continuing the hot streak that has aligned with the unprecedented rise in the cost of living.

Bitcoin falls below $20,000

US stock futures fell sharply after the inflation report, with the S&P 500 futures dipping more than 1.5% and Nasdaq futures sliding by 1.9%. The Dow futures also fell, and were down more than 300 points, or -1% ahead of market open.

The reaction on Wall Street was also seen across the crypto market. As stock futures plunged, the top cryptocurrency Bitcoin dipped below the psychologically important level of $20,000.

The volatility pushed BTC/USD to lows of $18,892 on crypto exchange Coinbase. At the time of writing, Bitcoin price was down 4.8% in the past 24 hours, according to data on CoinGecko.

BTC/USD price fell below $19,000 on Coinbase. Source: TradingView

The rest of the crypto market was also seeing fresh downside pressure, with Ethereum down 4.8% near $1,000 and BNB, XRP, Cardano and Solana also nursing fresh losses of 3.7%, 2.5%, 6% and 5.7% respectively.

The post Bitcoin slides as US inflation jumps 9.1% appeared first on CoinJournal.