Bitcoin price remained under pressure in June as a number of factors including rising rates and a liquidity crisis in the crypto industry weighed on the world’s biggest cryptocurrency.
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Bitcoin on Thursday fell below $19,000 as the world’s largest digital currency remains under pressure from macroeconomic worries and a liquidity crisis among high-profile crypto companies.
Bitcoin was last trading 5.7% lower at $18,978.60, according to Coin Metrics. The digital currency is down around 58% this year alone and has fallen about 72% from its all-time high of $68,990.90 that was hit in November.
“Bitcoin continues to be under pressure as other assets are. The mix of high inflation, rising interest rates and recession weigh on cryptocurrencies,” Yves Longchamp, head of research at digital asset-focused SEBA Bank, told CNBC via email.
Global stock markets remain under pressure with the S&P 500 falling to end its worst first half of the year since 1970.
Bitcoin has been closely correlated to the movement of equity indexes and in particular the Nasdaq. Stocks have been under pressure which has weighed on the price of bitcoin.
Investors are also worried about rampant inflation which is forcing global central banks to raise interest rates. That is also sparking fears of a recession in the U.S. and other countries.
Liquidity issues hit crypto companies
The crypto price crash has exposed the highly leveraged nature of the industry and caused a liquidity issue across companies.
A margin call is a situation in which an investor has to commit more funds to avoid losses on a trade made with borrowed cash.
Meanwhile, cryptocurrency exchange CoinFlex paused withdrawals for customers last week citing “extreme market conditions.” CoinFlex CEO Mark Lamb also said that long-time crypto investor Roger Ver owes the company $47 million. Ver denies that he owes the exchange money.
CoinFlex is issuing a new coin to make up the $47 million shortfall. Lamb told CNBC in an interview on Wednesday that CoinFlex is in talks with several large funds interested in buying the token. He also said that withdrawals for customers would not resume on Thursday as planned.
“In this environment, pressure on bitcoin and other crypto assets remain,” Longchamp said given the uncertainty over whether the deleveraging of the industry is over.
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