Crypto’s market cap fell below $1T. Now what?

Bitcoin’s value dropped as much as 17% after crypto lending platform Celsius froze withdrawals on its platform. Bitcoin fell to its lowest value since December 2020, contributing to crypto’s aggregate value sliding from a high of $3T to below $1T.

Why should we care?
Crypto’s continued decline should be a cause for concern across several sectors. Earlier this month, Coindesk suggested that the crypto sector may solve El Salvador’s sovereign debt problems by issuing favorable loans to the country’s pro-crypto government. “El Salvador might be able to secure some financing from large players in the crypto space, the so-called ‘whales’ who want to keep the idea of ‘nation-state bitcoin adoption’ alive,” wrote Frank Muci, a researcher at The London School of Economics. The sector’s continued decline makes such a drastic corporate intervention less likely. On another front, crypto’s stubborn downturn is fueling a conflict between pro-crypto initiatives and U.S. regulators. The Department of Labor warned in March that crypto-based retirement plans carry “significant risks of fraud, theft and loss.” The Department is now being sued by crypto retirement plan startup ForUsAll to revise its guidance, and Fidelity is moving ahead with its crypto 401(k) plans. In addition, JPMorgan wants to invest trillions of non-crypto assets through DeFi tokenizing strategies. We should expect louder calls to call off these plans, especially as crypto continues to yield reliably massive losses, not just iffy returns. National economies are literally at stake.