Cryptocurrencies plunged again on Tuesday, with bitcoin and ether falling to new 18-month lows, after the withdrawal freeze by major crypto lending firm Celsius Network delivered the latest shock to investors in the asset class.
Bitcoin fell a whopping 7.2 percent to $20,816, its lowest level since December 2020, extending Monday’s 15 percent plunge.
The world’s largest cryptocurrency is down more than 50 percent so far and 28 percent since Friday.
no. 2 token ether lost a whopping 10 percent to $1,075, its lowest since January 2021, and smaller tokens have taken even more.
The sell-off was the result of Celsius’s suspension of withdrawals and Friday’s high inflation data in the US fueling expectations of sharper interest rate hikes from the Federal Reserve, Singapore-based fund manager QCP Capital said in a note.
“The market is now panicking about the impact and contagion if Celsius becomes insolvent,” said QCP.
Celsius, in a blog post published in Asia on Monday, citing extreme market conditions, said it had frozen withdrawals and transfers between accounts, “to stabilize liquidity and operations as we take steps to preserve and protect assets.”
New Jersey-based Celsius, which has approximately $11.8 billion in assets, offers interest-bearing products to customers who deposit cryptocurrencies with its platform. It then lends out cryptocurrencies to earn returns.
Asset classes across the board have also been shocked by higher inflation, as investors have dumped risky assets.
The S&P index has fallen for four consecutive days, with the benchmark now falling more than 20 percent from its most recent all-time high, confirming a bear market by a commonly used definition.
Cryptocurrency stocks have been particularly hard hit.
Shares of crypto bank Silvergate Capital closed 16.7 percent on Monday, BTC buyer and business intelligence software provider MicroStrategy fell 25.2 percent and crypto exchange Coinbase Global lost 11.4 percent.
(This story was not edited by DailyExpertNews staff and was generated automatically from a syndicated feed.)