The latest jolt to cryptocurrency investors came on Tuesday, with bitcoin and ether plummeting to new 18-month lows following the halting of withdrawals by prominent cryptocurrency lending business Celsius Network.
Bitcoin dropped 7.2 percent to $20,816, a low not seen since December 2020, continuing a 15 percent drop on Monday.
The world’s most valuable cryptocurrency is down more than 50% year to date and 28% since Friday. The second-largest token, ether, has dropped as much as 10% to $1,075, its lowest level since January 2021, while smaller coins have been hit much more.
According to Singapore-based fund manager QCP Capital, the sell-off was caused by Celsius’ suspension of withdrawals and Friday’s high US inflation figures, which fueled anticipation of faster Federal Reserve interest rate hikes.
Will Celsius Go Bankrupt?
“The market is now worried about the impact and spread of insolvency if Celsius goes bankrupt,” QCP stated.
Celsius said it had banned withdrawals and transfers between accounts “to stabilize liquidity and operations while we take efforts to safeguard and protect assets” in a blog post published in Asia hours on Monday, citing extraordinary market conditions.
Celsius, situated in New Jersey, has roughly $11.8 billion in assets and offers consumers who deposit cryptocurrencies with its interest-bearing platform products. It then earns money by lending out cryptocurrencies.
According to Financial Express, Higher inflation has shaken asset classes across the board as investors abandoned risky assets. The S& P 500 has dropped for four days in a row, with the benchmark now down more than 20% from its most recent record closing high, confirming a bear market by one definition. Stocks in cryptocurrencies have taken a beating.
On Monday, shares of crypto bank Silvergate Capital fell 16.7%, BTC buyer and business intelligence software company MicroStrategy fell 25.2 percent, and crypto exchange Coinbase Global fell 11.4 percent.
