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It hasn't been a great couple of months for cryptocurrency owners.

Bitcoin, Ethereum, and basically all other major cryptocurrencies are sharply down Monday, with Bitcoin at one point trading at $23,500, a level we haven't seen since December 2020. Ethereum fared similarly, having touched the price of $1,180 and erasing all gains made since January 2021. The prices have recovered slightly in the past couple of hours, but everything is still sharply red.

Worse, Bitcoin, Ethereum, and other major cryptocurrencies have been on a downward spiral since early April this year, with little to no relief. What's happening? Is crypto over? Was it a mistake to quit your job six months ago by climbing onto your boss' desk and yelling "I AM A CRYPTO GOD"?

As always, no one knows, but here's a little overview of what's happening.

A big lender in the decentralized finance (defi) space, Celsius, seems to have gone insolvent. It's unclear how bad things are for Celsius' balance sheet, but there are estimates that Celsius owns $1.3 - $1.5 billion in crypto assets, including hundreds of millions in Ethereum and Bitcoin. If the company is forced to liquidate some of that, it would likely reflect on the price of the underlying assets. And since some of Celsius assets are staked elsewhere (meaning locked for a period of time, with Celsius unable to withdraw them), this is threatening to destabilize the price of certain crypto assets, such as stETH (staked Ether), which should normally closely follow the price of regular ETH.

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Crypto guy Cobie has a good overview of how these instruments work. But in short, when an entity as big as Celsius collapses, it potentially threatens some of the defi building blocks in which Celsius has heavily invested. Furthermore, people start wondering whether other companies of similar stature, such as BlockFi, will soon suffer the same fate (BlockFi says all is well, but Celsius was saying the same thing up until a week ago).

You may also remember the recent drama over cryptocurrency Luna and algorithmic stablecoin UST, which ended up in the entire thing folding, with billions of dollars of value wiped for owners. That particular episode is mostly over, but the fallout can still be felt in the market, both in terms of fear guiding the hands of investors and affected players in the space having to liquidate some crypto assets to stay solvent.

None of this has very much to do with Bitcoin, but crypto prices often move in unison, so Bitcoin is suffering the same fate as Ethereum.

Also, there are outside reasons that are affecting crypto prices. The macroeconomic environment is bad for risk-on assets (which cryptocurrencies most definitely are, despite promises of Bitcoin being a hedge for inflation). The Federal Reserve is reducing its balance sheet and raising benchmark interest rates in order to fight the raging inflation, but that's affecting the prices in the stock market as well as crypto. Fears of possible stagflation or recession, driven by uncertainties over Covid and the war in Ukraine, are making investors turn to "safe haven" assets, such as government bonds and fiat.

Put all that together, and it appears that crypto investors have given up on the idea of an easy return of the bull market, which in late 2021 drove prices of Bitcoin and Ethereum to the heights of about $69,000 and $4,800, respectively. Instead, everyone seems to be bracing for prices to go even lower, or (at best) stagnate for a while, until the macroeconomic situation clears and all the major destabilizing entities in crypto are either proven solid or gone for good.

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