© Reuters
By Geoffrey Smith
Investing.com — The rebounded from its 18-month low in morning trading in Europe on Tuesday, but remained under pressure from concerns over rising U.S. interest rates and the fallout from the collapse. from the Celsius Network cryptocurrency lender.
As of 5:50 a.m. ET (0950 GMT), the traded at $22,440, having hit an intraday low of $20,859. This still represents a drop of more than 7.0% from its level last Monday in New York.
The rebound has averted – at least for now – an event that could trigger much larger selling. Microstrategy (NASDAQ:), a software consultancy turned crypto hedge fund, faces a margin call on a $205 million loan it took out from Silvergate Capital in March.
If bitcoin fell below around $21,000, it would trigger a “margin call” or demand for additional capital, Phong Le, president of MicroStrategy, said in a May webcast.
MicroStrategy founder and CEO Michael Saylor has been one of bitcoin’s fiercest proponents in recent years. In particular, he took advantage of a national television program to encourage Americans to sell or mortgage all their valuable possessions to buy bitcoins.
MicroStrategy said in May that it had more than 95,000 unencumbered bitcoins — worth more than $2 billion even at current prices — that would be available to respond to such a call. Still, the prospect of further cryptocurrency squeeze-offs is troubling to many, at a time when prices for nearly every digital asset are crashing as the market prices every US interest rate higher.
The , whose two-day policy meeting begins later on Tuesday, is now expected to raise the Fed Funds target rate by 75 basis points to a maximum of 1.75% on Wednesday. The overshoot of inflation in Europe also led markets to price in the higher rates of the and the .
The crypto space, in general, is still reeling from the liquidity crunch of lender Celsius Network, which suspended withdrawals on Monday. Celsius, a one-stop-shop network that lends, acts as custodian and executes trading strategies for its clients, had more than $10 billion in assets under management before its liquidity position deteriorated sharply last week. . It is said to have suffered heavy losses on the Luna (Luna,) network which collapsed in May, and on derivatives related to .