The crypto industry braced itself for the fallout after the collapse over the weekend

Crypto investors and executives are bracing for more pain after Bitcoin price fell over the weekend, worsening the credit crisis that has hit the industry.

Bitcoin, the world's most actively traded cryptocurrency, fell as low as $17,628 on Saturday before recovering, according to data from CryptoCompare.

Investors and executives have been watching the token's price with concern, fearing that a drop below $20,000 could lead to forced liquidations of large leveraged bets.

Bitcoin, which serves as the main benchmark for the broader cryptocurrency market, has come under acute pressure in recent months as central banks and governments transitioned from a prolonged period of ultra-low interest rates to a battle against rising inflation.

"Crypto is in for a dark winter as the era of free money comes to an end this weekend with another brutal sell-off across the board. Risk assets are all being thrown out the window," said Dan Ives, managing director and senior equity analyst at Wedbush Securities.

The hunt for yield has shifted as major central banks, led by the U.S. Federal Reserve, drive up borrowing costs and end pandemic-era efforts to stimulate economic growth.

Traditional financial markets were rocked this month as traders feared the aggressive action could hurt global growth or even trigger a recession. Last week was the worst for global stocks since the darkest days of the pandemic in March 2020.

Bitcoin has fallen about 70 percent from its all-time high of nearly $70,000 last November to below $20,000. Ether, another actively traded token, fell as low as $900 over the weekend, meaning its price has fallen by four-fifths since its peak late last year.

That has contributed to an escalating credit crunch in the digital asset industry that threatens to engulf many of its key players.

Last month, so-called stablecoin Terra and its sister token Luna — popular with crypto traders looking for ultra-high returns — collapsed, two lending platforms blocked depositors from withdrawing their assets, and crypto hedge fund Three Arrows failed to comply with lenders' demands.

The weekend selloff resulted in more than $600 million worth of leveraged positions being sold, according to data from Coinglass.

Analysts expect these losses to put further pressure on the balance sheets of traders and lenders as many users have taken out loans against their crypto asset holdings.

However, Dogecoin, the “joke” cryptocurrency, rose after Elon Musk, CEO of electric car maker Tesla, posted a tweet about his continued support for the token.

Nayib Bukele, the president of El Salvador and a Bitcoin champion, urged investors on Sunday to “stop looking at the graph and enjoy life.” Bukele, who led the adoption of Bitcoin as legal tender in El Salvador last year, has dismissed IMF warnings about the policy.

The problems in the crypto market have spread to corners of the mainstream financial market. U.S.-listed MicroStrategy, a technology group that is a major investor in Bitcoin, has plunged nearly 70 percent this year. The proportion of crypto miners earning fees for validating crypto transactions has also fallen sharply.

Crypto exchanges – platforms sitting squarely in the teeth of the relentless market crash – have been forced to reverse hiring plans. The list includes Coinbase, Gemini, Mercado Bitcoin - a popular exchange in South America - and rival Celsius lender BlockFi, which cut 20 percent of staff this month.

Additional reporting by Adam Samson in Milan