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Bitcoin drops 8%, falls below $62,000 before rebounding
Bitcoin {{BTC}} and the broader cryptocurrency market fell nearly 10% on Saturday, with the price of the largest digital asset briefly falling below $62,000 before recovering to around $64,000 at press time.
It wasn’t alone: other major digital assets saw similar declines over the past 24 hours, including ether {{ETH}}, which fell 7% to just under $3,000, BNB {{BNB}} (down 9%) and solana {{SOL}} (down 12%), according to CoinGecko. Trading volume increased during the same period.
The decentralized finance (DeFi) sector has been hit particularly hard due to the market chaos, with depressed prices forcing liquidations and increasing the potential for havoc for some protocols.
Among the protocols under close scrutiny is Ethena, the Ethereum project behind USDe, a “synthetic dollar” designed to mirror the price of the U.S. dollar. Ethena has attracted more than $2 billion in deposits, but it uses a controversial method of maintaining USDe’s one-dollar “exchange rate” that has not been tested in such adverse market conditions.
The immediate cause of Saturday’s market declines was unclear, although former BitMEX CEO Arthur Hayes wrote in a blog post Last week, he said dollar liquidity would drop just before the U.S. tax deadline on April 15 — this coming Monday. A drop in liquidity would lead to lower prices, he said.
Learn more: Bitcoin Could Fall As Reward Halving Approaches, Arthur Hayes Says
The declines also came as Iran launches drone and missile attacks against Israelin what the Iranian government said was retaliation for an airstrike on its consulate in Damascus, Syria, which it blamed on Israel.
Cryptocurrency market prices began to recover after the X account (formerly Twitter) associated with Iran’s Permanent Mission to the United Nations said that “the deal can be considered done,” although it warned of a “significantly more serious” attack “if the Israeli regime makes another mistake.”
Iran’s military action, carried out under Article 51 of the UN Charter on self-defense, was carried out in response to the Zionist regime’s aggression against our diplomatic premises in Damascus. The case can be considered closed. However, if the Israeli authorities were to intervene, they should refrain from any prosecution.
— Permanent Mission of IRIran to the UN, NY (@Iran_UN) April 13, 2024