After two weeks of volatile downturns, the cryptocurrency has finally crashed.
The cryptocurrency Bitcoin suddenly plunged on the afternoon of June 18, dropping nearly $1,000 in 10 minutes. It then fell below the $20,000 mark to $18,850, marking the second straight week of losses and the lowest level since December 2020.
As of around 11 am on June 19, bitcoin was trading at $18,679, down more than 9% in 24 hours, 32.47% in 7 days and 51.48% for the year, according to CoinMarketcap data.
Ethereum, the second-largest cryptocurrency by market capitalization after Bitcoin, has also plummeted. Yesterday, Ethereum fell below $1,000 and hit a low of $880. It is down nearly 80% from its previous high.
As of now, the total market capitalization of cryptocurrencies is about $900 billion, down from $3 trillion in November. In other words, $2.1 trillion has been wiped off the cryptocurrency market in seven months. That's almost the same as wiping out an Apple's market value, which currently stands at $131 and $2.13 trillion.
The crash saw hundreds of billions of dollars wiped off the fortunes of several wealthy crypto heavyweights and other crypto holders overnight. Before that, thanks to the cryptocurrency bull market, Zhao Changpeng, Sam & Middot; Class, & middot; Sam Bankman-Fried, Mike & Middot; Some, such as Mike Novogratz, became billionaires with large holdings of cryptocurrencies.
However, after the June 18 carnage, the seven cryptocurrency-related billionaires have collectively lost more than $120 billion, according to the Bloomberg Billionaires Index, as bitcoin hovered near $18,000 from its all-time high of $69,000 on November 9. The biggest loser was Zhao Changpeng, the founder of Biance, the world's largest cryptocurrency exchange. Late last year, Zhao Changpeng surpassed Zhong Shanshan, founder of Nongfu Spring, to become the richest Chinese, with a wealth of nearly $96 billion.
Now, with the collapse of cryptocurrencies, Zhao changpeng's wealth has shrunk to $10.2 billion, losing nearly 89% of his wealth. Even Musk, who had been bullish on bitcoin, was caught up in the crash.
According to the data, Tesla currently holds 43,200 tokens, making it the second largest bitcoin holder. At the current price of $19,000 per coin, the number of tokens owned by Tesla is worth less than $900 million. Tesla has lost more than $600 million since buying Bitcoin for $1.5 billion in early 2021.
In fact, the price of bitcoin had been rising, making Tesla a fortune in the months before it bought it. Last November, Bitcoin hit an all-time high of $69,044.77, and Tesla is making even more money.
As to why it invested in risky assets like Bitcoin, Tesla said the aim was to diversify its sources of liquidity and make asset allocation more flexible. However, high liquidity hidden high risk, this time tesla suffered a heavy loss.
The cryptocurrency crash has not only left investors with nothing but some cryptocurrency exchanges worried about the coming "crypto winter." Coinbase, the largest U.S. cryptocurrency exchange, said it will lay off about 1,000 people, or 18% of its workforce. Coinbase reported a net loss of $430 million in the first quarter of 2022, compared with a net profit of $840 million in the previous quarter. Coinbase's stock has plummeted since listing on nasdaq last year. The market cap, which peaked at nearly $100 billion, is now less than $12 billion.
However, in the view of industry insiders, this round of slump will take more than a year to recover. Glassnode analysis points out that the bitcoin market has entered a phase consistent with the deepest and darkest bear market cycles of the past, and that on-chain trading fundamentals are deteriorating further.
Historically, this phase takes about 8-24 months to pass as the market finally bottoms out.
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