The value of Bitcoin dropped 9% in a 24-hour period to $19,217.81, according to Coin Metrics data. It was the lowest level for the benchmark cryptocurrency in one and a half years.
“Objectively, looking at the chart, there really is no viable support left,” Europac.com Chief Economist Peter Schiff tweeted. Most likely, Bitcoin will find short-term support along the long-term trend line around $6K.”
— Bloomberg (@business) June 18, 2022
Bitcoin has fallen 33% over the last week, dropping its total market capitalization to $370 billion from $580. Since hitting an all-time high of $67,567 on November 8, 2021, it has fallen more than 70%.
Other cryptocurrencies have also been pounded in recent days and even hours. Ether, the second-largest cryptocurrency, plunged 10% over the last 24 hours to $997.75, its lowest level since January 2021.
The currencies have always been volatile, but investors say aggressive interest rate hikes from the Federal Reserve and a liquidity crunch for big investors has accelerated the dive this time.
On Wednesday, the Fed moved to stem inflation by raising the federal funds rate three-quarters of a point, the biggest one-time jump in nearly 30 years. The move prompted a dash from risky assets, including stocks and cryptocurrency.
Cryptocurrency investors were hurt last month by the total collapse Terra, a so-called stablecoin designed to be worth $1. It crashed to less than a penny, taking the associated coin, Luna, down with it and wiping out $60 billion in market capitalization.
In addition, this week billion dollar cryptocurrency bank Celsius halted withdrawals, locking out investors and stoking fears it may be insolvent, according to CNBC.com. Celsius lends investors’ cryptocurrency holdings to other institutions.
Finally, cryptocurrency hedge fund Three Arrows Capital, which manages what was once $10 billion in cryptocurrency, reportedly faced bankruptcy after making a series of leveraged bets on cryptocurrencies including Bitcoin and Ether.
Three Arrows co-founder Zu Shu said it is “in the process of communicating with relevant parties and fully committed to working this out.” On Friday, the The Wall Street Journal reported the hedge fund may sell off assets as it hopes for another firm to save it from complete collapse.
Earlier this week, cryptocurrency exchange platform Coinbase said it would lay off 18% of its workforce amid the downturn in the digital asset market.
“We appear to be entering a recession after a 10+ year economic boom,” Coinbase CEO Brian Armstrong said in a Tuesday blog post. “A recession could lead to another crypto winter, and could last for an extended period.”