Bitcoin stabilized after a sharp drop in the value of cryptocurrencies

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Bitcoin stabilized after a sharp drop in the value of cryptocurrencies

Bitcoin rose on Tuesday after a series of negative headlines pushed the cryptocurrency to a new low in 2022. The price of bitcoin jumped more than 5 percent to $ 21,156, according to Coin Metrics. It dropped to $ 17,958 over the weekend.

That was the lowest point since December 2020. Meanwhile, Ethereum rose more than 3 percent to $ 1,145. The moves come after catastrophic headlines for the cryptocurrency industry that began under pressure from macroeconomic forces.

Wholesale prices rose at an almost record annual rate last week, and the Federal Reserve raised its reference interest rate, the highest increase since 1994. Cryptocurrency companies, including Coinbase and BlockFi, are laying off employees.

Crypto lenders, who promise users high returns for depositing their digital coins, are causing fears of insolvency. "With the broader risk sentiment firmly negative the sellers have had it all their own way for a few days," said Richard Usher at crypto firm BCB Group.

"It will take a shift in the overall risk sentiment to turn the price around significantly." Some predict that the value of cryptocurrencies could fall even more before a significant recovery occurs.

Too good to be true

Celsius's move to suspend withdrawals has raised fresh questions about regulatory oversight of such crypto-lending platforms.

"The market is now panicking about the impact and contagion if Celsius becomes insolvent," wrote Singapore fund manager QCP Capital in a note. U.S. Securities and Exchange Commission chair Gary Gensler said: "We've seen again that lending platforms are operating a little like banks.

They're saying to investors 'Give us your crypto. We'll give you a big return 7% or 4.5% return.' How does somebody offer (such large percentage of returns) in the market today and not give a lot of disclosure?" Gensler said during an industry event. "I caution the public. If it seems too good to be true, it just may well be too good to be true."