No let up in crypto slide, Bitcoin at 18-month low | Business and Economy News
Cryptocurrencies are now emblematic of a flight from speculative investments as monetary policy is tightened globally.
Cryptocurrencies tumbled afresh on Tuesday, with Bitcoin and Ether falling to new 18-month lows, after major cryptocurrency lending company Celsius Network’s freezing of withdrawals delivered the latest jolt to investors in the asset class.
Bitcoin fell as much as 7.2 percent, to $20,816, its lowest since December 2020, extending Monday’s 15 percent plunge.
The world’s largest cryptocurrency is down more than 50 percent year to date and 28 percent since Friday.
Number 2 token Ether lost as much as 10 percent, to $1,075, its lowest since January 2021, and smaller tokens have taken even more of a battering.
The sell-off was a result of Celsius’s suspension of withdrawals and Friday’s high US inflation data driving expectations of sharper interest rate rises from the Federal Reserve, said Singapore-based fund manager QCP Capital in a note.
“The market is now panicking about the impact and contagion if Celsius becomes insolvent,” QCP said.
The Celsius move triggered a slide across cryptocurrencies, with their value dropping below $1 trillion on Monday for the first time since January 2021, sparking worries the rout might spill over into other assets or hit other companies.
“Almost anything can be systemic in crypto … because the whole space is over-levered,” said Cory Klippsten, chief executive of Swan Bitcoin, a Bitcoin savings platform. “It’s all a house of cards.”
Celsius said in a blog post published in Asia hours on Monday citing extreme market conditions that it had frozen withdrawals and transfers between accounts, “to stabilise liquidity and operations while we take steps to preserve and protect assets”.
New Jersey-based Celsius, which has approximately $11.8bn in assets, offers interest-bearing products to customers who deposit cryptocurrencies with its platform. It then lends out cryptocurrencies to earn a return.
Cryptocurrencies have become emblematic of a flight from speculative investments as monetary policy is tightened around the world to fight price pressures, draining liquidity from global markets.
Asset classes across the board have also been shaken by higher inflation as investors dumped risky assets.
The S&P index has fallen for four straight days, with the benchmark now down more than 20 percent from its most recent record closing high to confirm a bear market according to a commonly used definition.
Cryptocurrency stocks have been particularly hard hit.
Crypto bank Silvergate Capital shares closed down 16.7 percent on Monday, BTC buyer and business intelligence software provider MicroStrategy tumbled 25.2 percent, and crypto exchange Coinbase Global lost 11.4 percent.
