Cryptocurrencies (virtual currencies) including bitcoin plunged for two days in a row because of the pressure to repay funds from investors who invested in bitcoin by debt to participate in the bitcoin rally, according to the US economic journal CNBC, Reported.
CNBC quoted a report from Goldman Sachs, Wall Street’s top investment bank.
According to Goldman Sachs, the recent bitcoin rally has caused huge loans by investors looking to invest in bitcoin futures. Because of this, interest on loans soared to 144% per annum.
This situation is not normal, Goldman Sachs pointed out, that the price of bitcoin must fall in order to return the loan rate to its original state.
Goldman Sachs analyzed that bitcoin plunged for two days in a row when investors who owed debt because the interest on the loan was too high and sold bitcoin under pressure to repay funds.
In addition, remarks by Finance Minister Janet Yellen and Chief Executive Officer Elon Musk had a major impact on the Bitcoin crash.
On the 22nd, Minister Yellen struck a direct shot at the New York Times’ online dealbook conference, saying, “I don’t think Bitcoin is widely used as a mechanism for trading.”
“I think it’s often for illegal financial activities,” he said. “This is a very inefficient payment method, and the amount of energy consumed to process it is awesome.”
“People should know that bitcoin is a highly speculative asset and can be very unstable,” said Yellen. “I am very concerned about the potential losses that investors may suffer.”
Tesla CEO Elon Musk, who set fire to the recent cryptocurrency rally, also said on the 20th that “Bitcoin and Ethereum prices are a bit high,” providing a start to the cryptocurrency crash.
Glenn Goodman, who works as a cryptocurrency trader in the UK, explained, “Recently, the cryptocurrency market was dry firewood, but when Musk lit it, it burned.”
Meanwhile, Bitcoin plunged for two consecutive days. According to CoinMarketCap, an American cryptocurrency market relay site, as of 4 PM on the 23rd (local time), Bitcoin is recording $48,069, a decline of 11.51% from 24 hours ago. The day before, Bitcoin collapsed at $50,000. On the previous day, Bitcoin plunged close to 13%, dropping from the $58,000 line to less than $50,000.
Nevertheless, Bitcoin rose 60% from the beginning of the year and 360% from the same period last year.