Bitcoin drops 12 percent, below $24000.

[Tomconroy]

Bitcoin tumbled below $24,000 on Monday, hitting its lowest level since December 2020, as investors dump crypto amid a broader sell-off in risk assets.

Meanwhile, a crypto lending company called Celsius has paused withdrawals for its customers, sparking fears of contagion into the broader market.


The world’s largest cryptocurrency bitcoin briefly dropped below the $24,000 mark around 05:00 a.m. ET, according to CoinDesk data, before jumping back above that level shortly after.

Over the weekend and into Monday morning, more than $200 billion had been wiped off the entire cryptocurrency market. The cryptocurrency market capitalization fell below $1 trillion on Monday for the first time since February 2021, according to data from CoinMarketCap.


https://www.cnbc.com/2022/06/13/bitcoin-btc-falls-as-market-focuses-on-celsius-issue-fed-rate-hike.html

But I thought this time would be different!
It was $64000 in November. It was only supposed to go up!

[speak easy]

1. "It was only supposed to go up!"

That is one thing I have NOT read about cryptos over the years. Everyone knows they are highly volatile - whether or not you think they are worth more than a tulip bulb.

[Tomconroy]

2. 'Highly volatile'. Just what you want in a currency.

[speak easy]

3. Indeed. Bitcoin is digital fools gold.

[modrepub]

4. Interest Rates

probably have a lot to do with crypto drops. Governments tend to increase money supply during hard times in an effort to stimulate their economies. More money in circulation allows some of it to start inflating asset prices feeding inflation. Once central banks start raising interest rates to slow economies down to tackle inflation, people start looking for safe harbors. When interest rates are high, people turn to assets that have immediate returns, not things that appreciate over the long term.

Crypto doesn't earn interest like fiat currencies. So you can't put it in a bank and earn interest on it. If the price drops, like it is now, people start selling and the cycle feeds back on itself triggering more selling.

Interesting item here is as stocks and other assets get sold, government tax revenues increase. More sales of inflated assets trigger capital gains taxes.

[speak easy]

5. There are crypto 'lenders' that offer interest bearing products

... and they are heading for the dumpster.

Major crypto lender Celsius freezes withdrawals as markets tumble

//snip/

[Celsius Network] raised 750 million in funding late in November from investors, including Canada's second-largest pension fund. The company was valued at the time at $3.25 billion.

https://news.yahoo.com/crypto-firm-celsius-pauses-transfers-032204607.html

[modrepub]

6. HAHAHA

OMG, the stupidity doesn't end!

It would be more comical if we could wall off these dummies from the rest of the financial universe so they don't hurt us. But alas we can't so their loss will only contribute to the general economic malaise. But at least they shouldn't be able to show up at Congress and ask for a bail out.

[Mike Niendorff]

7. It's way more complicated than people think

What's actually happening is a structural shift on the Ethereum network (second largest crypto network, after Bitcoin) that has locked up 10% of the circulating supply of ETH and now is essentially indefinitely postponing withdrawals. That "staked" money has been essentially securitized, but because of the price volatility and the postponement of withdrawals from the staking system, its pegged value (1 staked ETH = 1 ETH) has been failing. This is creating insolvency that is threatening to take down the entire "DeFi" sector, all of which is essentially built on the Ethereum network.

The link below is a really good explanation of what's happening (from a long-term ETH advocate who sounded the alarm today, although I don't share all of his views).

I honestly haven't seen much news coverage that's coming even close to getting this story right, although Bloomberg did at least mention the connection to Celsius (a big DeFi player that just suspended withdrawals -- see link above for details).

In addition, there's also a HUGE amount of leveraged money in the crypto markets, and the rapid price drops are creating a vicious circle where price drops force liquidation of crypto assets, which then forces further price drops, which forces further liquidations, until that situation finally finds a bottom somewhere (assuming the critical networks remain solvent and functional, which is in doubt at this point).

I've seen reports that if ETH falls below $1150, it will force approximately $500 million in further liquidations, with another $300 million at risk if Bitcoin sinks below $21500.

For reference, ETH is currently trading at $1226, and BTC at $24001. Both of these scenarios are within reach right now (although ETH is close enough this might actually happen within the next several hours).


MDN

[Tomconroy]

8. I got the 'This is creating insolvency' part.

[speak easy]

9. Ethereum down 22% in 6 hours ... hmmm.

[NCLefty]

10. Crypto Is Still Garbage... Story At 11...

[Amishman]

11. Some of the projects have very promising tech - and Bitcoin isn't one of them

That being said, I've made quite a bit of money on various cryptocurrencies over the years.