Bitcoin price: Will cryptocurrency prices rise? Three key factors | City & Business | Finance

The latest figures from Coinbase show Bitcoin’s (BTC’s) track brought it to a new low over the last day, as the coin touched $20,087.90 for the first time since 2020. The current price is a fraction of its $66,935.89 all-time high and bodes poorly for cryptocurrency investors. Many of them have chosen to cash in while the coin has briefly recuperated to $21,175.96, but many factors behind market skittishness remain.

What is causing the Bitcoin selloff?

The bearish fervour gripping the cryptocurrency market started on Monday, when prominent lender Celsius halted operations.

Chiefs insisted they meant to navigate “extreme market conditions” when they suspended withdrawals, sparking insolvency fears as it sought to protect customers and place the company “in a better position”.

Celsius’ troubles are only part of the equation, and analysts have outlined three key factors behind the downturn.

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Systemic issues in crypto infrastructure

Marcus Sotiriou, an analyst with UK-based digital asset broker GlobalBlock, said Celsius is in danger of “potentially becoming insolvent”.

He said the situation is improving, though, as the Celsius “on-chain liquidity crisis has become healthier over the past 24 hours”.

Adding to collateral “across the board for three main positions” has helped, and Celsius being able to reach a deal would “lead to a relief rally” as people consider what to do next with their stETH position.

Hedge fund insolvency

Celsius isn’t the only firm analysts fear is in trouble, as cryptocurrency hedge fund Three Arrows is also facing insolvency.

The fund, which has championed participation in the crypto market, faced unforeseen liquidation and would cause a “drastic economic risk” for lenders if it collapsed, Mr Sotiriou said.

He added: “Lenders will be forced to protect themselves by withdrawing credit from the system and result in further de-leveraging of crypto assets. I think it is likely that more…

Read more at www.express.co.uk

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