Bitcoin price drops below $23,000 as cryptocurrency lender halts withdrawals

The Bitcoin selloff, sparked by a reversal of the buying mania that drove it higher, has become the fourth deepest selloff in the 13-year history of the cryptocurrency.

On Monday, bitcoin was down 15% to $23,250.72, according to market data from Dow Jones. This is down 20% from Friday, and 66% from the November high of $67,802.30.

Bitcoin’s drop since November has wiped out nearly $2 trillion in the broader market. The total market capitalization of Crypto, which peaked in November at nearly $3 trillion, was about $975 billion Monday evening, according to data provider CoinMarketCap.

There are some obvious reasons why Bitcoin is selling right now. For one thing, its moves have generally been more in line with other risk assets, such as technology stocks, as professional traders have joined the crypto market in greater numbers. Speculative assets like cryptocurrency are declining with inflation and central banks’ efforts to combat it with higher interest rates, a dynamic that makes riskier stocks less attractive than safer assets. On Friday, the US inflation index reached 8.6%, which sent the stock market lower.

As the turmoil in the cryptocurrency market spread over the weekend, customer withdrawals from widely used cryptocurrencies were frozen. Celsius Network LLC said it is temporarily halting all withdrawals, exchanges between cryptocurrencies and transfers between accounts “due to severe market conditions.” As of May, the lender managed $11 billion in user assets, according to its website.

Subsequently, the major cryptocurrency exchange, Binance, suspended bitcoin withdrawals. The company said at 8 a.m. ET that it was a technical issue and expected it to resume within 30 minutes. Withdrawals resumed before noon today, New York time.

Companies in the sector are increasingly resorting to layoffs amid sales. Percentage competitor BlockFi said Monday that it will cut 20% of its roughly 850 employees, according to a statement from CEO Zach Prince. “Like many in technology, we have been affected by the significant shift in macroeconomic conditions, which has had a negative impact on our growth rate,” Amir wrote on twitter. On Friday, said it would cut 260 employees, about 5% of its staff.

Other than bitcoin and cryptocurrencies, publicly traded stocks in the crypto sector have also been penalized. micro . strategy a company

MSTR -25.18%

It fell 25% to $152.15. Coinbase Global a company

Currency -11.41%

It fell 11% to $52.01. Blockchain riot a company

riot -10.06%

It fell 10% to $4.65.

MicroStrategy, a Virginia-based business software company, has combined its fortunes with bitcoin, a strategy spearheaded by the company’s founder and CEO, Michael Saylor. The company converted all its cash reserves into bitcoin, issued debts to buy more bitcoin and borrowed money to buy more bitcoin.

The company stated that it had 129,000 bitcoins on its balance sheet as of the end of the first quarter. Roughly 96,000 of them were not pledged as collateral. The rest, though, could be subject to margin calls depending on how deep the selloff is.

The company has not yet received any such calls, mr. Saylor said. “We don’t expect to receive a margin call, and the company has a lot of additional collateral if we need to post more,” he said in an email.

However, individual investors have been receiving cover calls. About $1 billion in guarantees pledged by about 260,000 retailers have been liquidated in the past 24 hours, according to data provider CoinGlass.

The renaissance in day trading during the pandemic and the search for assets that could yield while bond yields plunged to historic lows, took off bitcoin in the fall of 2020. The cryptocurrency jumped to record highs in November of last year. Since then, it has fallen 65% against the dollar, believing the expectations of supporters who said the cryptocurrency could replace gold as a hedge against inflation and turmoil in the broader markets.

“Usually highly liquid and risky cryptocurrencies are the first to sell in the market,” said Jeff Mei, chief marketing officer of ChainUp, a blockchain technology solutions provider.

Leah Wald, co-founder and CEO of asset manager Valkyrie Investments, said incidents such as the percentage withdrawal halt and the premature collapse of the terra USD stablecoin tend to provoke fear and create distrust in the market. It reflects the kind of unlimited enthusiasm that traders had towards cryptocurrencies, the dynamic name nickname “Hypium,” which has been driving cryptocurrencies since 2020.

“Selling is done when there is a lot of ‘hypium,’ and in the last year there has been a lot of ‘hypium’ and euphoria because of projects that didn’t have much of a foundation behind it,” she said.

She said none of this should be surprising. Crypto follows the same path as other manic-led assets, such as tech stocks in the dotcom era or silver in the days of the Hunt brothers. “All assets at the end of the day follow the same trend,” she said. “As much as we think crypto is a new asset class, it is not.”

write to Eileen Yu at, Joe Wallace at and Paul Vigna at

Corrections and amplifications
The Bitcoin sale is the fourth deepest selloff in the 13-year history of the cryptocurrency. An earlier version of this article incorrectly stated that it was the third deepest Bitcoin sale. (corrected June 13th)

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