Crypto market is crashing. Bitcoin falls below $27,000
Bitcoin's slide that began last week has continued into this week as well. The cryptocurrency is now down over 57 percent from its all-time high in November last year, and this is hitting coin exchanges, CNN reported.
Last week, Bitcoin and other cryptocurrencies were staring at a sudden crash after the U.S. Federal Reserve announced a tightening of its monetary policy. While there were no sudden drops in value, cryptocurrencies hit a downward slide that has refused to stop anywhere. Investors are selling-off crypto coins, hoping to park their funds in relatively safer assets.
Where will Bitcoin hold its level?
Experts had told CNBC that Bitcoin, the largest crypto coin by market cap, needed to hold onto the $30,000 to remain stable. However, the cryptocurrency slid way further down this mark to $26,846, CNBC reported.
However, whether the cryptocurrency can hold its valuation at this level is also doubtful after the Bureau of Labor Statistics announced that consumer prices for April were at 8.3 percent. The fear of continuing inflation is spooking investors, who are also withdrawing funds from stocks. However, volatile assets like cryptocurrencies are seeing the most impact.
Bitcoin fell 11 percent, BNB lost 26 percent, while SOL lost 37 percent of its valuation in a single day, CoinDesk reported. Terra's LUNA was in for a rude shock as it fell 96 percent and dropped from the list of top 10 crypto coins to 81st.
Liquidations and bankruptcy
As cryptocurrencies lost another 16 percent of their overall market cap, they also triggered liquidations in the futures market. As Investopedia explains, liquidation is triggered automatically when an asset value falls below a set threshold and is sold immediately to avoid further losses.
As Ether dropped 22 percent, traders lost $333 million in liquidations, while Bitcoin futures lostf $330 million. More volatility is expected over the next few days, according to CoinDesk.
Slumping cryptocurrencies are also hitting crypto brokerages hard; Coinbase reported a loss after a 27 percent drop in revenues for its first quarter. Readers might remember the company for its bizarre Super Bowl advertisement. The high-profile company that went public last year was valued at $100 billion. However, with the current crypto slump, its valuation has been reduced to $15 billion while also sparking fears of bankruptcy, CNN said in its report.
CEO Brian Armstrong took to Twitter on Tuesday to allay fears after the company wrote to the Securities and Exchange Commission (SEC) that crypto assets held on behalf of customers would be part of proceedings if the company were to go bankrupt.
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