Bitcoin and other cryptocurrencies continued to fall on Tuesday, as investors bailed out risky assets in anticipation of sharp rises in interest rates to fight inflation.
Nerves remain on edge after two of the world’s biggest cryptocurrency platforms curbed activity on Monday as the broader market meltdown continued apace.
Celsius Network, which has 1.7 million customers, said “extreme market conditions” forced it to temporarily stop all withdrawals, cryptocurrency exchanges and inter-account transfers.
“We are taking this necessary action for the benefit of our entire community to stabilize liquidity and operations while taking steps to preserve and protect assets,” the company said in a blog post.
The UK-registered company has about $3.7 billion in assets, according to its website. He pays interest on cryptocurrency deposits, and lends them out to make a return.
“The suspension of withdrawals by Celsius yesterday provided an extra negative boost,” noted Jeffrey Halley, senior Asia-Pacific market analyst in Oanda. “I can only assume that the next big level for bitcoin will be $20,000.”
The cryptocurrency market has taken a heavy hit in recent months after its pandemic boom turned into collapse. As the world’s major central banks raised interest rates to tame inflation, traders rushed to abandon riskier investments, including their crypto assets.
Bitcoin, the world’s most valuable cryptocurrency, dropped about 3.12% on Tuesday, around 11:37 am, Brasília time, reaching close to US$ 22,000. The asset has lost about 25% of its value since Friday — about 67% below its all-time high in November last year, when it traded around $69,000, according to Coinbase data.
Ether – the second most valuable digital currency – was up slightly by 0.07% at the same time, having accumulated losses since Friday to around 28%. It has lost about 71% of its value since November.
Binance, the world’s largest cryptocurrency exchange, suspended withdrawals from its bitcoin network for a few hours on Monday (13). The company said some transactions were “stuck” and were causing a delay.
“The Binance team is working on a long-term solution to speed up pending transactions on the bitcoin (BTC) network and avoid similar situations in the future,” it said in a statement.
So-called “stablecoins” – cryptocurrencies tied to the value of more traditional assets – have also been hit. Tether, a popular stablecoin, broke its peg to the US dollar in May, puncturing the view that it could serve as a hedge against volatility.
terraUSD, a riskier algorithmic stablecoin that used complex code to peg its value to the US dollar, collapsed in the same month, wiping out the savings of thousands of investors. The coin was valued at just over $18 billion in early May before falling, according to data from CoinMarketCap.
Celsius Network did not say when it would allow customers to withdraw their deposits again, only that “it would take time”.
Meanwhile, governments are closely watching the fallout from the cryptocurrency crash and may move to protect investors.
“There are a lot of risks associated with cryptocurrencies,” US Treasury Secretary Janet Yellen told the Senate last month. She said her department should release a report on the matter.
Source: CNN Brasil
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