In the wake of a global sell-off in risk assets, Bitcoin fell below $23,000 on Monday, its lowest level since December 2020. A business named Celsius has temporarily put a halt to all withdrawals, raising concerns about a possible virus spreading across the crypto market. The bearish divergence in the crypto markets is being fueled by macroeconomic issues such as growing inflation and the projected rise in interest rates by the Federal Reserve.
On Monday, Bitcoin fell below $23,000, its lowest point since December 2020, as traders dumped the cryptocurrency amid a wider sell-off in financial stocks. As a result of the suspension of cryptocurrency withdrawals by Celsius, several investors are concerned that the situation may spread to the wider market. Data from cryptocurrency exchange CoinDesk shows that the world’s most popular cryptocurrency, bitcoin, has fallen below the $23,500 threshold. At one point, the price of one bitcoin dropped by nearly 18%, to about $22,000 in value. There were some recoveries, and bitcoin was trading at $23,000 on Wall Street around 4 p.m., a loss of 16%. According to CompareBroker, the cryptocurrency market value went below $1.1 trillion on Monday for the first time since February 2021.
Cryptocurrency Market Issues
The Nasdaq index, which is highly weighted by tech stocks, plummeted last week. Stocks and other risky assets tend to correlate well with Bitcoin and other cryptocurrencies. Cryptocurrency prices decrease when these indicators do as well.
Collapse of Cryptocurrencies
Since the collapse of the so-called computational stablecoin terraUSD, or UST, and its counterpart Luna in mid-May, the crypto market has also been on edge. The market has become more worried after a crypto lending firm named Celsius. Celsius announced on Monday that it was halting all payouts, swaps, and account transfers because of the current market circumstances.
According to Celsius, which claims to have 1.7 million clients, you may get an 18% return on your investment by using the platform. Celsius is a service that allows users to deposit cryptocurrency. An institution or an investor may then borrow the cryptocurrency. Celsius generates income for its users because of this. However, the downturn in the crypto market has harmed Celsius.
Compared to the previous day, the value of Celsius’ own cryptocurrency, CEL, has dropped by more than half. In general, the marketplaces are now under strain from inflationary fears and interest rate rises. The market is now so intertwined with other interlinked protocols and companies. Similar contagion events in crypto might produce outsized falls. He added that everyone is ready for more bad news in the medium and long term. In down markets, we might see more events like the collapse of the Terra, which revealed flaws and overleveraged projects.