Cesare Fracassi, a finance professor at the University of Texas at Austin who leads the school’s Blockchain Initiative, believes bitcoin’s fall under the psychological threshold isn’t a big deal. Instead, he said the focus should be on recent news from lending platforms.
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One of them, Celsius Network, said this month that it was pausing all withdrawals and transfers, with no sign of when it would give its 1.7 million customers access to their funds. Another platform, Babel Finance, said in a notice posted online Friday that it would suspend redemptions and withdrawals on products due to “unusual liquidity pressures.”
“There is a lot of turbulence in the market,” Fracassi said. “And the reason why prices are going down is because there is a lot of concern the sector is overleveraged.”
Cryptocurrency exchange platform Coinbase announced Tuesday that it had laid off about 18 per cent of its workforce, with CEO and cofounder Brian Armstrong placing some of the blame on a coming “crypto winter.”
Stablecoin Terra imploded last month, losing tens of billions of dollars in value in a matter of hours.
Crypto had permeated much of popular culture before its recent tumble, with Super Bowl ads touting the digital assets and celebrities and YouTube personalities routinely promoting it on social media.
David Gerard, a crypto critic and author of “Attack of the 50 Foot Blockchain,” said the recent meltdowns show a failure by regulators, who he believes should have put more scrutiny on the industry years ago.
Many nascent investors — especially young people — invested based on a false hope that was sold to them, he said: “There are real human victims here that are ordinary people.
Alex Diaz, the administrator of a Facebook group for Bitcoin enthusiasts, said he believes the bitcoin crash is not the fault of bitcoin but of parallel developments in the cryptocurrency space, some of which are “just schemes or outright scams.”
“What it will take to recover is just time,” Diaz said.
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Chan reported from London. Associated Press journalist Leah Willingham in Charleston, West Virginia, contributed to this report.
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