Bitcoin price drops below $18,300 as sell-off accelerates

Bitcoin plunged to $18,248, and ether fell to $944 as of mid-afternoon on Saturday, as the sell-off in the crypto market accelerates. The world’s two most popular cryptocurrencies are down more than 35% in the past week, as both breach symbolic price barriers.

Carnage in the crypto market is partly to do with pressure from macroeconomic forces, including spiraling inflation and a succession of Fed rate hikes. We have also seen these blue chip cryptos track equities lower. It doesn’t help that crypto firms are laying off large swaths of employees, and some of the most popular names in the industry are facing solvency meltdowns.

Here’s how we got here.

The week started with crypto prices plummeting, and bitcoin falling as much as 17% at one point in the day. It seemed like the crypto winter was here.

In the chaos, Celsius, a major crypto staking and lending firm, shocked the market when it announced that all withdrawals, swaps and transfers between accounts have been paused due to “extreme market conditions.” In a memo addressed to the Celsius Community, the platform also said the move was designed to “stabilize liquidity and operations.”

Celsius effectively locked up its $12 billion in crypto assets under management, raising concerns about the platform’s solvency. The news rippled across the crypto industry, reminding some of what happened in May, when a failed U.S. dollar-pegged stablecoin project lost $60 billion in value and dragged the wider crypto industry down with it.

Celsius was known for offering users a yield of up to 18.63% on their deposits. It’s like a product a bank would offer, except with none of the regulatory safeguards.

Those crazy high yields were what eventually came under scrutiny.

“This risk certainly seems like it’s just the beginning,” said John Todaro, Needham’s vice president of crypto assets and blockchain research.

“What I would say is on the decentralized side — a lot of these DeFi protocols, a lot of those positions are over collateralized, so you shouldn’t quite see the underfunding situation that could happen with centralized borrowers and lenders. But that being said, you could still see a lot of liquidations with that collateral being sold off on DeFi protocols,” continued Todaro.

Crypto markets appeared to stabilize on Tuesday, with bitcoin hovering at around $22,000 and ether at around $1,100.

Investors were assessing the fallout of Celsius, and meanwhile, another crypto firm joined a growing list of companies cutting staff to try to shore up profits.

Coinbase announced it was laying off nearly a fifth of its workforce due to crypto volatility. The company had previously cut spending and even…