Bitcoin Bounces Back After Falling to New 2022 Lows

Bitcoin rose on Monday after falling below its 2017 high over the weekend. Still, investors remained cautious due to a barrage of negative crypto stories and macro issues weighing on their mood.

For much of Monday, the world’s largest cryptocurrency by market cap soared past the $20,000 threshold. According to Coin Metrics, it last fell by 1.2 percent to $19,840.89. Bitcoin plunged as low as $17,601.58 during the weekend. In the meantime, ether fell 1% to $1,088.41.

While investors will welcome the recovery, bitcoin remains 70% behind its all-time high in November. Year to date, it is down 57%. Many have claimed that a market bottom is near. However, with so much economic uncertainty still present, bitcoin has further downside potential.

With bitcoin failing to hold decisively above $20,000, industry observers predicted that the surge would be brief. In recent weeks, the broader cryptocurrency market has been troubled by several difficulties, beginning with the collapse of algorithmic stablecoin terraUSD and its related token luna.

Crypto Lending Companies Now in Spotlight

The spotlight is now on crypto lending companies that promise users high returns for depositing their digital coins. Celsius, a corporation with 1.7 million customers and roughly $12 billion in crypto assets under management, halted customer withdrawals last week, raising suspicions that it is bankrupt.

Leverage refers to trading in which investors make transactions using borrowed money. As a result, investors can gain greater exposure to positions with less initial capital. However, this considers a dangerous kind of trading because it needs investors to guarantee they have sufficient money to meet the so-called margin requirements. If they do not, their position will automatically terminate. These liquidations are viewed as having a significant role in market movements.

Ethereum, the network that powers ether, is being upgraded to a new version that will be faster and cheaper to use. When the Terra stablecoin project failed, the price of stETH began trading below the cost of ether as investors fled. A month later, crypto lender Celsius halted account withdrawals, causing stETH’s value to plummet even worse.