Crypto is caving in. What's up?

It hasn't been a good couple of months for people who own cryptocurrencies.

We haven't seen anything like this in over a year, with all of the major cryptocurrencies trading at or near their lowest levels in over a year. All gains made since the beginning of the year were wiped out by the price of $1180. The prices have gone down a bit, but everything is still red.

Since early April this year, major cryptocurrencies have been on a downward spiral. What is going on? Is it time for a new coin? Is it a mistake to quit your job six months ago and shout "I am a CRYPTO GOD"?

Here is an overview of what's happening.

Celsius is a big lender in the defi space. It's not clear how bad Celsius' balance sheet is, but there are estimates that the company has over a billion dollars inCryptocurrencies. The price of the underlying assets would likely be reflected in the company's decision to liquidate. Since some of Celsius assets are locked up for a period of time, with Celsius unable to withdraw them, this is threatening to destabilizing the price of stETH, which should usually follow the price of regular ETH.

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Cobie has a good explanation of how these instruments work. When Celsius collapses, it could threaten some of the defi building blocks that Celsius has invested in. People are starting to wonder if other companies of similar stature, such as BlockFi, will suffer the same fate. Celsius was saying the same thing up until a week ago.

The recent drama over Luna and UST, which resulted in billions of dollars of value being wiped out for owners, is something you may remember. The market can still feel the effects of that particular episode, both in terms of fear and the need to liquidate some assets to stay afloat.

None of this has anything to do with Bitcoins, but they are suffering the same fate as other cryptocurrencies because they are all moving in the same direction.

There are other reasons that affect the price of the coin. The macroeconomic environment is bad for risk-on assets, which include Cryptocurrencies. The Federal Reserve is raising benchmark interest rates in order to fight inflation, but that is affecting the prices in the stock market. Fears of a possible recession and uncertainty over Covid are making investors turn to safe haven assets such as government bonds.

It appears that investors have given up on the idea of an easy return of the bull market, which drove the prices ofCryptocurrencies to heights of about $69,000 and $4,800. Everyone is bracing for prices to go even lower until the macroeconomic situation clears and all the major destabilizing entities are gone for good.