On Sunday morning, the carnage in the crypto markets showed no signs of calming down, as bitcoin and ether continued to drop off at a rapid pace.
The current crypto winter differs from the previous one in that crypto is plummeting with tech stocks as the larger economy is fragile, inflation is rising, and a full-fledged recession appears to be on the horizon.
As things stand, it could take years for crypto prices, especially bitcoins to recover their lost glory.
Crypto down from its cycle highs
Some investors had earlier predicted that bitcoin would not fall below its previous cycle’s highs, a prediction that held true during the 2018 bear market but has since been debunked for the current cycle.
- This comes as insolvency concerns for crypto hedge funds and enterprises develop.
- The markets had seen high financial instability as a result of a variety of opportunistic leveraging; you couldn’t determine where all these dangers were accumulating.
- The pioneer crypto fell below the $18K price level for the first time on Saturday, failing to recover to the $20K level it had been trading at for the previous week.
- Bitcoin’s market capitalization has dropped to around $350 billion, down about 75% from its all-time high in November.
- The drop in bitcoin’s price also marks the breach of a significant price level, namely bitcoin’s previous crypto cycle’s all-time high.
Why is this important
The flagship crypto has previously experienced asymptotic price rises followed by steep drops, which have typically lasted several months to two years.
- Investors and speculators in cryptocurrency refer to these periods as “cycles,” and they frequently use historical price levels to set new price targets.
- Companies in the crypto industry have made similar cuts as a result of the pessimism, but not all, with some hiring and feasting in the midst of the chaos.
- Gemini Trust Co., which is owned by billionaires Tyler and Cameron Winklevoss, was one of the first crypto behemoths to announce layoffs.
Meanwhile, Coinbase, an American listed Crypto exchange earlier announced a hiring freeze, rescinding job offers to employees with whom it had already reached agreements.
Later, the company would announce the need to lay off 1,100 employees in order to prepare for an “extended” crypto winter, slashing its workforce by 18% due to “over-hiring” during the previous bull run in crypto markets.