Bitcoin plunged to $18,248, and ether fell to $944 as of mid-afternoon on Saturday, as the sell-off in the crypto market accelerates. The world’s two most popular cryptocurrencies are down more than 35% in the past week, as both breach symbolic price barriers.

Carnage in the crypto market is partly to do with pressure from macroeconomic forces, including spiraling inflation and a succession of Fed rate hikes. We have also seen these blue chip cryptos track equities lower. It doesn’t help that crypto firms are laying off large swaths of employees, and some of the most popular names in the industry are facing solvency meltdowns.

Here’s how we got here.

The week started with crypto prices plummeting, and bitcoin falling as much as 17% at one point in the day. It seemed like the crypto winter was here.

In the chaos, Celsius, a major crypto staking and lending firm, shocked the market when it announced that all withdrawals, swaps and transfers between accounts have been paused due to “extreme market conditions.” In a memo addressed to the Celsius Community, the platform also said the move was designed to “stabilize liquidity and operations.”

Celsius effectively locked up its $12 billion in crypto assets under management, raising concerns about the platform’s solvency. The news rippled across the crypto industry, reminding some of what happened in May, when a failed U.S. dollar-pegged stablecoin project lost $60 billion in value and dragged the wider crypto industry down with it.

Celsius was known for offering users a yield of up to 18.63% on their deposits. It’s like a product a bank would offer, except with none of the regulatory safeguards.

Those crazy high yields were what eventually came under scrutiny.

“This risk certainly seems like it’s just the beginning,” said John Todaro, Needham’s vice president of crypto assets and blockchain research.

“What I would say is on the decentralized side — a lot of these DeFi protocols, a lot of those positions are over collateralized, so you shouldn’t quite see the underfunding situation that could happen with centralized borrowers and lenders. But that being said, you could still see a lot of liquidations with that collateral being sold off on DeFi protocols,” continued Todaro.

Crypto markets appeared to stabilize on Tuesday, with bitcoin hovering at around $22,000 and ether at around $1,100.

Investors were assessing the fallout of Celsius, and meanwhile, another crypto firm joined a growing list of companies cutting staff to try to shore up profits.

Coinbase announced it was laying off nearly a fifth of its workforce due to crypto volatility. The company had previously cut spending and even rescinded job offers in the hopes of stabilizing its business.

“We had the recent inflation report that came out that I think surprised many folks,” explained President and Chief Operating Officer Emilie Choi.

“We’ve had Jamie Dimon and others talk about an upcoming economic hurricane and so given what’s happening in the economy, it feels like the most prudent thing to do right now,” continued Choi.

Crypto companies across the board are looking for ways to cut costs, as investors rotate out of the riskiest assets, pulling down trading volumes.

Crypto.com recently announced a staff reduction of 260 people, as did Gemini, which said it would lay off 10% of its workforce — a first for the U.S.-based cryptocurrency exchange and custodian. 

MicroStrategy CEO Michael Saylor appeared on CNBC Wednesday morning to discuss concerns around his firm, which has made a $4 billion bet on bitcoin. Saylor has said the company doubles as the first and only bitcoin spot exchange-traded fund in the U.S., so investing in MicroStrategy is the closest you’ll get to a bitcoin spot ETF.

MicroStrategy has used company debt to purchase bitcoin, and in March, Saylor decided to take another step toward normalizing bitcoin-backed finance when he borrowed $205 million using his bitcoin as collateral — to then buy more of the cryptocurrency.

“We have $5 billion in collateral. We borrowed $200 million. So I’m not telling people to go out and take a highly leveraged loan. What I am doing, I think, is doing my best to lead the way and to normalize the bitcoin-backed financing industry,” said Saylor, who added that publicly traded crypto miner Marathon Digital also took out a credit line with Silvergate Bank.

As bitcoin prices tanked this week, investors worried the company would be asked to put up more collateral for its loan, but Saylor said the fears were overblown.

“The margin call is much ado about nothing,” Saylor told CNBC earlier this week. “It’s just made me Twitter famous, so I appreciate that…We feel like we have a fortress balance sheet, we’re comfortable, and the margin loan is well managed.”

Then on Wednesday afternoon, the Federal Reserve raised its benchmark interest rates three-quarters of a percentage point in its most aggressive hike since 1994. The Fed said the move was made in an effort to curb sky-high inflation.

Crypto prices initially rallied on the news as investors hoped we could avoid a recession, but that rally was short-lived.

We were back in the red on Thursday. Bitcoin fell to around $20,000, to prices it hadn’t seen since the end of 2020.

The losses were closely tied to a sell-off on Wall Street, in which the Dow fell 700 points to its lowest level in more than a year.

It appears that investors can’t shake the fears of recession, and some say it could take time for cryptocurrencies to recover from the sell-off in riskier assets.

“I think that we’re in a long drawdown period here,” Jill Gunter, Espresso Systems co-founder & chief strategy officer, told CNBC’s Squawk on the Street.

“I think that we’ve taken the elevator down, and I think that we, as an industry, are going to have to take the stairs back up and climb out by building real utility,” she said.

Gunter said that, in many ways, what we’re seeing is a “healthy washout.”

“One doesn’t want to, as a builder, as an investor for the long-term… be in a market where it’s being driven by just short-term price action, by speculation, as, let’s be honest, the crypto market has been largely over the last couple of years,” continued Gunter.

Carnage in the crypto markets shows no signs of slowing down, as bitcoin and ether continue their sell-off at a rapid clip on Saturday afternoon.

This comes as crypto hedge funds and businesses face growing questions about insolvency.

“We had financial instability because of this opaque leverage, you just couldn’t tell where all these risks were building up,” Paxos CEO & Co-Founder Charles Cascarilla told CNBC.

“In some ways, this is just an age old story. You’re borrowing short and lending long. And I think it’s really unfortunate that people lost money, and I think it will, in some ways, set back the space, because you will lose some early adopters or some of the people who just came in new to the space,” continued Cascarilla.

But Cascarilla also says that investors are still looking for quality crypto investments.

“The fundamental technology here and the adoption curve that we see, the institutions that are coming in, how you can get your financial system to operate at the speed of the internet, those are things that need to happen,” he said.