On Monday morning, the bitcoin sector was on edge as investors concerned that spread from difficulties at large crypto firms might cause a massive shakeout if not addressed.
Bitcoin, which has lost 57% this year and 37% this month, dipped below $20,000 for the first time since December 2020 over the weekend. The level has symbolic value because it corresponds to the peak of the 2017 cycle.
The price drop comes as a result of problems at multiple large industry players, and future drops might have a cascading impact as other crypto investors are forced to sell their holdings to pay margin calls and cover losses.
Three Arrows Capital, a crypto hedge fund, is considering its alternatives, including asset sales and a bailout by another firm, according to its founders in a Wall Street Journal piece published Friday, the same day Asia-focused crypto lender Babel Finance announced it would cease withdrawals.
Many of the industry’s current issues may be linked back to the catastrophic collapse of so-called stablecoin TerraUSD in May, as announced by US-based lender Celsius Network earlier this month.
On Monday, bitcoin was trading on either side of $20,000, while ether, the second-largest cryptocurrency, was trading at $1,075, having fallen below its own symbolic barrier of $1,000 over the weekend.