Bitcoin fell to its lowest level in 16 months.
The capitalization of the cryptocurrency market has shrunk by more than $ 200 billion, CNBC writes. Bitcoin, the most popular currency, was below $ 26,000 for the first time in 16 months
This is the first time the cryptocurrency has sunk below $ 27,000 since December 26, 2020. Since then, bitcoin has somewhat reduced its losses and last traded at $ 27,850.
Ethereum, the second-largest cryptocurrency by market capitalization, fell to $ 1,719.73. This is the first time the token has fallen below the $ 2,000 mark since July 2021.
Investors are fleeing cryptocurrencies at a time when stock markets are also experiencing a sharp decline due to fears of rising prices and deteriorating economic prospects.
US inflation data released on Wednesday showed prices for goods and services jumped 8.3% in April, higher than analysts expected and close to a 40-year high.
Due to rising inflation, the Fed has doubled interest rates this year, raising the key interest rate to 0.75-1%. This makes the dollar attractive for investment because market players prefer to invest in safer assets and redirect funds from other investments in the US currency, which is already more profitable.
Another problem for market participants is the shake-up of TerraUSD, which shakes confidence in the so-called decentralized financial space.
By definition, this type of cryptocurrency has a fixed price against the dollar and is often around $ 1, as was the case with TerraUSD. The price of a currency that is not backed by foreign exchange reserves fell to less than 30 cents.
The aftermath of Terra’s collapse has led to fears of market contamination. Tether, the world’s largest stable coin, also fell below its fixed dollar on Thursday, falling to 95 cents at one point.
According to analysts, the fall in stable coin prices indicates that there may be a collapse in the market similar to the one that occurred in 2008 with the bankruptcy of Lehman Brothers on September 15. Then the bankruptcy of one of the largest banks in the United States erupted in one of the worst economic and financial crises in the world since the Great Depression in the 1930s.
Bad days for Coinbase too
The company announced disappointing financial results. Against the backdrop of falling cryptocurrency prices, the Coinbase exchange reported disappointing analysts for the first quarter of the year.
With revenue of $ 1.48 billion, Coinbase reports $ 1.17 billion. The periods are 27% lower than the previous year. The net loss for the period is $ 430 million.
The loss of customers is even more negative, as those who performed operations in the “retail” segment decreased by 2.2 million compared to the end of 2021 to 9.2 million people. Over the same period, total trade fell from $ 547 billion in the fourth quarter to $ 309 billion.
This led to a drop in the company’s shares of 15% yesterday, and since the beginning of 2022 investors are in the red by 70%.
Bitcoin briefly fell below a symbolic price threshold of $ 30,000 on Monday and fell more than 30 percent this year.
However, Coinbase does not seem to be worried about its long-term prospects.
“We believe that these market conditions are not constant and we remain focused on the long term,” the company wrote in a letter to shareholders accompanying the announcement of the results. He also said he was focusing on the next generation of cryptocurrencies outside of commerce.
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