Bitcoin fell to a new 18-month low on Wednesday, dragging smaller tokens with it and worsening a market meltdown sparked by crypto lender Celsius this week, freezing customer withdrawals.
The world’s biggest cryptocurrency fell 7.8% to $20,289, its lowest level since December 2020. It has lost about 28% since Friday and more than half of its value this year. It has fallen about 70% from its record high of $69,000 in November.
The digital currency sector took a beating this week after US crypto lender Celsius froze withdrawals and transfers between accounts, stoking fears of contagion in markets already reeling from the demise of terraUSD and luna tokens the month last.
Expectations of steeper interest rate hikes from the US Federal Reserve as inflation in the world’s largest economy soars have also increased pressure on risky assets, from cryptocurrencies to stocks.
Crypto funds saw outflows of $102 million last week, according to digital asset manager CoinShares, citing investors’ anticipation of tighter central bank policy.
The value of the global crypto market fell 70% to less than $900 billion, from a peak of $2.97 trillion in November, according to data from CoinMarketCap.
“The ripples running through the market haven’t stopped yet,” said Scottie Siu, chief investment officer at Hong Kong-based Axion Global Asset Management. “I think we are still in the middle of that unfortunately the game is not over.”
Celsius has hired restructuring lawyers and is seeking possible financing options from investors, The Wall Street Journal reported, citing people familiar with the matter. Celsius is also exploring strategic alternatives, including financial restructuring, he said.
Smaller cryptocurrencies, which tend to move in tandem with bitcoin, also fell. Ether, the second-largest token, fell 12% to $1,045, a new 15-month low.
The chaos in the crypto market has spread to other businesses, with a number of exchanges downsizing.
The major US exchange Coinbase Global announced on Tuesday that it would cut around 1,100 jobs, or 18% of its workforce. Gemini, another US exchange, said this month it would cut 10% of its workforce. Yet others continue to hire. Binance, the world’s largest exchange, said on Wednesday it was hiring for 2,000 positions, and US exchange Kraken said it had 500 vacancies.
“Hang on,” Binance CEO Changpeng Zhao tweeted.
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Post expires at 6:24pm on Monday June 27th, 2022