Bitcoin drops below $ 19,000 as crypto-meltdown intensifies

Bitcoin fell below $ 19,000 on Saturday, prolonging a brutal slide in cryptocurrencies.

The price of bitcoin fell more than 9% in 24 hours to $ 18,642.22, at about 14 ET, according to Coin Metrics data. The last time bitcoin was traded around this level was December 2020.

Ether, the second largest token, plunged 10.54% to $ 963.22.

Crypto investors are struggling with aggressive rate hikes by the US Federal Reserve and a worsening liquidity crisis that has pushed major players into financial difficulties.

On Wednesday, the Fed raised interest rates by 75 basis points, the largest increase since 1994. This has led to a retreat from risky assets of all kinds, including equities and crypto.

Elsewhere, the cryptocurrency is still on track after the collapse of the $ 60 billion collapse of two major tokens last month.

Terra, a so-called stablecoin that was meant to be worth $ 1, crashed for a fraction of a cent, taking with it an accompanying coin called the luna.

This week, the $ 3 billion lender stopped Celsius’ withdrawals, locked users out of their money and raised fears of insolvency.

Celsius works a lot like a bank, takes investors’ crypto and lends it to institutions to generate returns on deposits. It has many assets in the so-called decentralized financial area.

Celsius, who says it “acts in the interest of society,” did not return further requests for comment.

Another key player, Three Arrows Capital, is in the midst of its own liquidity crisis.

The $ 10 billion crypto hedge fund is reportedly on the verge of insolvency after the plunge in the crypto markets reduces the value of its holdings.

3AC was an investor in Terra and has made bets on a number of tokens, including bitcoin, ether and solana.

Zu Shu, the company’s co-founder, said it was “in the process of communicating with relevant parties and is fully committed to resolving this.”

On Friday, he told The Wall Street Journal that 3AC was considering selling assets and rescuing another company to avoid collapse.

3AC did not respond to a CNBC request for comment.

Ryan Shea, an economist at crypto-investment firm Trakx.io, said the recent stress in digital assets was “the cryptocurrency market’s equivalent of natural selection.”

“In the absence of a central bank, there are firms operating in the area to be responsible, and those who are not (ie excessive influence, poor risk management, poor security, etc.) will not succeed,” Shea said in a research note Friday. . .

“This process is undoubtedly painful, but in the end the lack of a centralized backstop is a good thing, as it means avoiding moral danger because there are no rescue packages in crypto unlike in the fiat system.”

– CNBC’s Jessica Bursztynsky contributed to this report.