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Bitcoin crashes further as crypto market losses top £300 billion in a week

·2-min read
The Bitcoin price has dropped 30% in the past 5 days. (REUTERS)
The Bitcoin price has dropped 30% in the past 5 days. (REUTERS)

The huge sell-off in the cryptocurrency markets sent the price of Bitcoin plummeting a further 10% overnight, taking it down to £16,653, while Ethereum dropped 16% to £846.

The crypto crash has now wiped off over £300 billion from the combined value of crypto assets in the past seven days alone, according to data from CoinMarketCap.

It has prompted crypto exchange businesses to take drastic action to stifle further losses and stay afloat.

Yesterday, US-based cryptocurrency exchange platform Coinbase announced it would be laying off over 1,000 employees “to manage operating expenses in response to current market conditions and ongoing business prioritisation efforts”.

The stock has tanked 86% since its peak in November, wiping £68 billion off its market cap.

On Monday, cryptocurrency exchange platform Binance temporarily suspended Bitcoin withdrawals, while crypto lender Celsius Network announced it was suspending withdrawals and transfers between accounts because of “extreme market conditions.”

“We are taking this action today to put Celsius in a better position to honour, over time, its withdrawal obligations,” the company said in a statement.

Shares in US business MicroStrategy have fallen 24% since Friday as investors feared the company faced a margin call on a $205 million loan it had taken out to buy more Bitcoin. In May, the company suggested the call would take effect if the Bitcoin price dropped below $21,000, meaning it could have to sell off some crypto holdings to meet the call.

The firm has bought almost 130,000 Bitcoins at an average price of $30,700, causing it to have made a paper loss of almost $1 billion.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Red lines on a chart belie the financial pain which this loss of value is set to cause for millions of crypto holders.

“At a time when costs are escalating all over the place, nursing a big hole in a crypto wallet is the last blow they need.”

The steep drop in crypto prices began on Friday after figures released by the US Department of Labor showed US inflation hit a 40-year high of 8.6% in May, led by rising food and energy prices.

The announcement triggered a mass sell-off in Bitcoin and Ethereum, as investors spooked by rising prices ditched riskier assets in favour of safe havens.

El Salvador finance minister Alejandro Zelaya was forced to defend his government against concerns raised over the country’s fiscal stability after it was estimated to have lost at least $40 million from its decision to buy more than 2,300 Bitcoin since September.

Zelaya said: “The fiscal risk is extremely minimal… $40 million does not even represent 0.5% of our national budget.”

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