After a “black Saturday”, the collapse of bitcoin and cryptocurrencies deepens

FILE PHOTO: Souvenir tokens representing the Bitcoin, Ethereum, Dogecoin and Ripple cryptocurrency networks in water in an illustration taken May 17, 2022. REUTERS/Dado Ruvic/Illustration

After a true black Saturday, the collapse of cryptocurrencies continued this Sunday morning, with the fall of the two main crypto species, bitcoin and ethereum, to which most of the other cryptos were added, in a collapse that It also extends to the so-called DeFi subsector, or decentralized finance.

In this way, at 8 a.m. in Argentina, bitcoin was trading around USD 27,400 and its capitalization fell below USD 523,000 million, losing more than 5% in the last 24 hours and 7.40% in the last 7 days, having registered losses in 10 of the last 11 weeks.

In the case of ethereum, the second largest capitalization crypto, the collapse was even more pronounced, 7.5% in the last 24 hours and 18% in the last 7 days, to less than $1,458 and a capitalization of less than $177,000. millions.

two thirds lost

The capitalization of the more than 11,000 cryptocurrencies reported by the CoinMarketCap site thus fell to 1.1 trillion dollars, practically a third of the USD 3.2 trillion that it was worth at the end of last year.

Ethereum, the second crypto by capitalization, falls 7.5% in the last 24 hours and 18% in the last 7 days

Tether, the third crypto with the highest capitalization, held its value, as it is a “stablecoin” with a fixed value against the dollar, with a capitalization of USD 72.4 billion. This crypto, associated with BitFinex, is the most used in transactions between cryptocurrencies, for which the general weakening of the crypto universe is also a tombstone on its future.

A noteworthy fact is that the volume of cryptocurrency transactions in 24 hours increased no less than 26.5%, to just over USD 84.3 billion, a reflection of the internal upheaval of the system, in which the majority of holders seek to liquidate at least part of its holdings, making it difficult to find a floor for the fall. In turn, transactions with stablecoins (such as Tether) accounted for almost 86% of the volume traded in the last 24 hours.

All signs of a crisis of confidence in the foundations of the system, whose infrastructure, the British magazine The Economist recently pointed out, “is definitely broken.”

Representations of the monero cryptocurrency and hard drugs are seen in this illustration taken on May 23, 2022. Image taken on May 23, 2022. REUTERS/Dado Ruvic
Representations of the monero cryptocurrency and hard drugs are seen in this illustration taken on May 23, 2022. Image taken on May 23, 2022. REUTERS/Dado Ruvic

The financial climate and operating conditions of the crypto market rapidly deteriorated after a lull in early June, a month after the collapse of Terra, an algorithmic stablecoin in turn tied to another cryptocurrency, Luna, whose value collapsed, erasing 48 hours about USD 40,000 million of value in the digital wallets of its holders and producing an immediate cascade of losses of USD 300,000 million. Since then, a month ago, the crypto universe has failed to restore trust.

The inflation data in the US released on Friday, which meant the highest year-on-year rate of increase in prices in the last 41 years, was another blow to the illusions of recovery of the crypto system and of the stock markets, since it is discounted that the Federal Reserve, the Central Bank of the USA, will have to deepen its policy of increasing rates and restricting liquidity to combat inflation, and it will be increasingly difficult for it to avoid an economic recession of world.

This financial climate is mixed with increasingly numerous and loud claims to regulate and supervise the crypto market, for its effects on financial systems in general and for its criminal derivations, in particular as a means for money laundering and other illicit operations.

In the first days of last week, bitcoin, which has several resurrections under its belt, had hinted at a recovery, up to USD 31,700, but finally succumbed to greater forces and unless it recovers in the next few hours, this Sunday it would close at its level lowest since December 21, 2020, more than two and a half years ago.

crypto winter

The evolution of bitcoin has been very similar to that of the Nasdaq 100, which ended the week with a loss of 5.6 percent. In general, the financial and stock markets have been victims of inflation and the increase in interest rates, but cryptocurrencies and the shares of “tech” companies have suffered proportionally more, since in the previous stage they had been the most dependent of the propulsion of abundant money provided by central banks and the deficits of the main treasuries of the world.

With the stage of easy money over, what began Cameron and Tyler Winklevossmain shareholders of Gemini, a crypto exchange, called the “crypto winter”, a season in which assets must defend themselves on their own merits and in which the crypto universe is being forced to review its dogmas.

KEEP READING:

Black Saturday: the two main cryptocurrencies in the world fall again
The fauna of the crypto crash: 3 theoretical pillars and 12 outstanding people of a universe in crisis
A “massive bankruptcy”: the apocalyptic forecast of the bitcoin billionaire prophet

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