Bitcoin and other major cryptocurrencies recorded huge losses
It is official. We are in a bear market. The cryptocurrency market has been in a bearish trend over the past few months. Since hitting an all-time high of $3 trillion, the crypto market has shed over 60% of its value.
This week, the total cryptocurrency market cap dropped below the $1 trillion mark for the first time this year. Bitcoin, the world’s leading cryptocurrency by market cap, tested the $20k psychological level before bouncing back to trade above $21k per coin.
The cryptocurrency market’s poor performance can be attributed to the interest rate increase by the Federal Reserve last week. The US Federal Reserve has raised the US federal funds rate to 1.5%-to-1.75%, representing an increase of 75 basis points. This is the highest interest rate since the early 1990s.
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Celsius pauses withdrawals
This week saw one of the leading cryptocurrency lending firms put in place an interesting rule. Celsius told its users earlier this week that it had paused withdrawals on its platform to stabilize its liquidity position. The firm took to Twitter to announce the suspension of withdrawals, transfers and swaps, highlighting the current state of the cryptocurrency market.
Celsius’s CEO Alex Mashinsky said the firm is working nonstop to address the situation. However, the situation remains the same.
Meanwhile, crypto lending firm Nexo had offered to buy beleaguered rival Celsius's assets, claiming it is in a healthy position to do so.
Nexo stated that it is "in а solid liquidity and equity position to readily acquire any remaining qualifying assets of Celsius, mainly their collateralized loan portfolio."
Another algorithmic stablecoin losses its dollar peg
The Terra incident is still fresh in the minds of many. The dust hasn’t settled down on the collapse of Terra’s UST stablecoin, and another algorithmic stablecoin is suffering.
USDD, the stablecoin developed by the TronDAO ecosystem, has lost its dollar peg. This latest development comes as the broader cryptocurrency market recorded huge losses this week.
USDD dipped as low as $0.974 on Tuesday and has slipped slower to currently stand at $0.9721.
Following this latest development, the Tron DAO Reserve revealed that it plans to withdraw 2.5 billion Tron (TRX) tokens, worth about $125 million, from the Binance exchange in an attempt to prop up the price of its USDD stablecoin against the US dollar.
The bear market is causing layoffs in the crypto space
The bear market is not only affecting the prices of cryptocurrencies, but it is also affecting the operations of numerous companies within the ecosystem. The companies are now making changes by laying off some employees.
Coinbase, one of the largest cryptocurrency exchanges in the world, announced earlier this week that it intends to lay off 18% (about 1,000 workers) of its workforce. This move is to ensure the company weather the market slump in crypto.
Crypto lending firm BlockFi announced on Monday that it is laying off roughly 20% of its staff. The company currently has more than 850 workers and intends to decrease this number over the coming weeks.
Circle launches its euro-backed stablecoin
Circle, the company behind the USDC stablecoin, has launched a new stablecoin. However, this stablecoin is pegged to the Euro. The company said the Euro Coin (EUROC) would be a regulated, euro-backed stablecoin issued under the same full-reserve model and built on the same pillars of trust, transparency, and security that have made USDC one of the world's most trusted digital currencies. USDC is one of the leading stablecoins in the crypto space, and its EUROC could gain massive adoption in the coming months and years.