Bitcoin Drops Down $19,000 as Crypto Tension Rise
Bitcoin fell below $19,000 on Thursday. The world’s largest digital currency remains under pressure among the top crypto companies due to macroeconomic problems and a liquidity crisis. Bitcoin was last reported down 5.7% at $18,978.60. The digital currency has fallen by around 58% this year alone. And it’s down about 72% from its all-time high of $68,990.90 set in November. Bitcoin continues to come under pressure, as do other assets. A mix of high inflation, rising interest rates, and a recession weighs on cryptocurrencies.
Global stock markets remain under pressure. The S&P 500 fell to end its worst first half since 1970. Bitcoin is closely related to the movement of equity indices, Especially with Nasdaq. Stocks were under tension, which weighed on Bitcoin’s value. Investors are also concerned about pervasive inflation. This forces global central banks to raise interest rates. It also causes fears of a recession in the US and other countries.
The crypto price crash exposed the highly leveraged nature of the industry. It also caused liquidity problems in companies. Three Arrows Capital had liquidation. The company had exposure to the now-defunct TerraUSD algorithmic stablecoin and token Luna.
Bitcoin and Crypto
A margin call is when an investor must put up more money on a trade made with borrowed cash to avoid a loss. CoinFlex suspended user withdrawals, citing severe market conditions. The CEO of CoinFlex also said that the long-standing crypto CoinFlex is issuing a new coin to make up the $47 million shortfalls. The firm is in talks with several large funds interested in purchasing the token. It also said withdrawals for customers would not resume on Thursday as planned. Bitcoin and other crypto-assets remain under pressure in this environment.
The EU has lifted to hook the West of crypto assets by accepting new laws for the sector. On Thursday, representatives of the European Parliament and EU countries scrapped an agreement containing measures to protect against market abuse and manipulation. It also requires crypto firms to provide details on the environmental impact of their assets. Cryptocurrency prices fell by less than $900 billion. According to experts, the recent drop in the value of digital currencies shows just how high. They are risky and speculative.
The Crypto Asset Markets Act is expected to be effective around 2023. Globally, crypto assets are largely unregulated. And EU national operators are only required to control the fight against money laundering. The MiCA Act is also expected to define the regulatory regimes for cryptocurrency globally.
It is worth noting that MiCA will be the world’s first comprehensive regime for crypto assets. Accordingly, it contains strong measures to protect against market abuse and manipulation. Thursday’s EU talks also focused on issues like oversight of crypto assets and energy consumption. The US and UK have not yet approved similar rules; However, regulators in both countries have warned of the need for stronger protections in the sector. Crypto assets have come under pressure since the collapse of TerraUSD and luna tokens last month, When Celsius froze funds and transfers. However, the sector is also sensitive to wider economic factors.
This includes stock market declines associated with rising inflation. Also, with the increase of interest from the central banks, rising rates can make risky assets less attractive. For example, certain tech stocks whose price may be based on expectations of strong future earnings over many decades; may be less attractive than the fixed income offered by direct investments; for example, bonds, which become more attractive in conditions of higher credit rates.