Bitcoin <\/p>\n
Crypto investors are grappling with aggressive interest rate hikes from the U.S. Federal Reserve and a worsening liquidity crunch.<\/p>\n
Bloomberg | Bloomberg | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
Bitcoin<\/a> dropped below $20,000 on Saturday, extending a brutal slide in cryptocurrencies.<\/p>\n The price of bitcoin fell more than 6% in 24 hours to $19,149.60, according to Coin Metrics data<\/a>. The last time bitcoin fell below the $20,000 level was December 2020.<\/p>\n Ether<\/a>, the second-largest token, plunged 7% to $996.2, its lowest level since January 2021.<\/p>\n Crypto investors are grappling with aggressive interest rate hikes from the U.S. Federal Reserve and a worsening liquidity crunch that has pushed major players into financial difficulty.<\/p>\n The Fed on Wednesday hiked rates by 75 basis points<\/a>, its biggest increase since 1994. That has led to a retreat from risky assets of all stripes, including stocks and crypto.<\/p>\n Elsewhere, the crypto space is still reeling from the fallout of the $60 billion collapse<\/a> of two major tokens last month.<\/p>\n<\/div>\n Terra<\/a>, a so-called stablecoin that was meant to be worth $1, crashed to a fraction of a cent, taking an associated coin called luna<\/a> down with it.<\/p>\n This week, $3 billion crypto lender Celsius halted withdrawals<\/a>, locking users out of their funds and raising fears it may face insolvency.<\/p>\n Celsius acts a lot like a bank, taking investors’ crypto and lending it out to institutions to generate a return on deposits. It holds lots of assets in the so-called decentralized finance space.<\/p>\n Celsius, which says it is “acting in the interest of our community,” did not return multiple requests for comment.<\/p>\n Another key player, Three Arrows Capital, is in the midst of its own liquidity crisis.<\/p>\n The $10 billion crypto hedge fund is reportedly on the brink of insolvency after the plunge in crypto markets reduces the value of its holdings.<\/p>\n 3AC was an investor in Terra and has made leveraged bets on numerous tokens including bitcoin, ether and solana.<\/p>\n<\/div>\n Zu Shu, the firm’s co-founder, said it was “in the process of communicating with relevant parties and fully committed to working this out.”<\/p>\n