The value of bitcoin has fallen for 11 straight days, its longest ever sustained slump. It’s value has dropped more than 70% since its highs in November.
It was one of the most dramatic weeks in the short history of the cryptocurrency market, bookended by the type of announcements investors fear the most from a counterparty: We’re sorry, but we just can’t return your money to you right now.
It all started late Sunday, when a sort of crypto shadow bank called Celsius Network suspended withdrawals from depositors who had been enticed by sky-high interest rates that, in retrospect, were likely too good to be true. By the end of the week, on the other side of the world in Hong Kong, the digital-asset lender Babel Finance also froze withdrawals.We’re working on it, both firms told customers, and no doubt they are.
That firm, by the way, said this week it will lay off 18 per cent of its previously fast-growing workforce, joining other pink-slip-issuing crypto startups such as Gemini and BlockFi that are struggling amid a relentless plunge in asset prices that’s been dubbed “crypto winter.” Just as Bear Stearns’s hedge funds were among the first to reveal problems from the subprime mortgage crisis, Three Arrows is likely not alone. The “cockroach theory” springs to mind: If you see one of those nasty bugs scurrying across the floor, chances are there are plenty more hiding behind the fridge or under the sink.