RIYADH: Bitcoin tumbled on Wednesday to a new 18-month low, dragging smaller tokens down with it and spurring a sharp fall in crypto markets sparked by crypto lender Celsius freezing customer withdrawals.
The world’s largest cryptocurrency fell as much as 7.8 percent to $20,289, its lowest since December 2020. It has lost around 28 percent since Friday and more than half of its value this year.
Cryptocurrencies have been hit hard this week after US crypto lender Celsius froze withdrawals and transfers between accounts, stoking fears of wider fall-out in digital asset markets already shaken by the demise of the terraUSD and luna tokens last month.
Expectations of sharper US Federal Reserve interest rate hikes as inflation in the world’s biggest economy soars have also heaped 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 has fallen under $900 billion, CoinMarketCap data shows, down from a peak of $2.97 trillion in November.
“The ripples running through the market haven’t stopped yet,” said Scottie Siu, investment director at Hong Kong-based Axion Global Asset Management. “I think we’re still in the middle of it unfortunately, the game isn’t over.”
Smaller cryptocurrencies, which tend to move in tandem with Bitcoin, also fell. Ether, the second largest token, fell as much as 12 percent to $1,045, a new 15-month low.
Crypto exchanges lay off employees as the market plummets
Cryptocurrency exchanges are shedding hundreds of workers, the Financial Times reported.
US-listed Coinbase announced plans on Tuesday to lay off nearly a fifth of its staff, equaling more than 1,000 employees, joining rivals such as Gemini, Crypto.com, and BlockFi in cutting headcount.
“If there isn’t trading volume there is no money… it looks like it is going to be tough for quite some time,” said Julian Sawyer, former CEO of crypto trading venue Bitstamp to the FT.
Celsius hires lawyers to resolve issues post halt
As reported by the Wall Street Journal on Tuesday, cryptocurrency lender Celsius Network LLC hired restructuring lawyers from law firm Akin Gump Strauss Hauer & Feld LLP to help it resolve mounting financial issues, according to Reuters.
Despite looking for possible financing options from investors, Celsius is also exploring other strategies, including a financial restructuring, the newspaper reported, citing sources.
The crypto lender halted all swaps, transfers, and withdrawals between accounts because of extreme market conditions on Sunday.
Several cryptocurrencies fell below $1 trillion on Monday for the first time since January 2021 after the Celsius move.
