Bitcoin Slide Hits Entire Crypto Ecosystem

The largest cryptocurrency in the world is now trading under $24,000.

Bitcoin had a rough weekend, with its price falling more than 19% from the end of Friday through Monday, trading at $24,000, a level not seen since December 2020. 

The ProShares Bitcoin Strategy ETF (BITO), the largest bitcoin futures ETF, with $854 million in assets under management, is down roughly 22% from the end of Friday, a similar amount to actual bitcoin. 

Still, this rout has affected the entire cryptocurrency ecosystem. For example, ethereum is down more than 28% during the same time period and is currently at levels it hasn’t touched since January 2021. 

The decline is a little less dramatic in the crypto equity space, but still steep. The Bitwise Crypto Industry Innovators ETF (BITQ) is down more than 14% from its Friday close.  

The latest decline was sparked at least partially by U.S. Treasury Secretary Janet Yellen’s assertion at a New York Times event last Thursday that bitcoin investments were not appropriate for retirement accounts. Fidelity announced back in April that it would offer bitcoin investments in its 401(k) plans.  

But Yellen’s comments were not the only contributing factor. Markets are widely anticipating a significant rate hike from the Federal Reserve on Wednesday, and many investors are taking a risk-off stance in preparation for the possibility of recession. 

Further contributing to the slide, on Sunday, when the crypto plunge was still unfolding, Celsius Network, a crypto lending company that is a major player in the space, halted withdrawals and transfers and may have worsened the slide in doing so. The firm cited “extreme market conditions” as the reason behind the freeze.  

According to the Financial Times, the digital assets market was worth around $3.2 trillion back in November 2021, but that value has since declined to $1 trillion today. Bitcoin represents a little less than half of that value.  

Contact Heather Bell at [email protected]