Bitcoin fell to a fresh 18-month low on Wednesday, bringing smaller tokens down with it and worsening a market crisis caused by crypto lender Celsius suspending customer withdrawals earlier this week.
The world’s largest cryptocurrency dropped 7.8 percent to $20,289, its lowest level since December 2020. It has lost almost 28% of its value since Friday and more than half of its value this year. It has fallen around 70% from its all-time high of $69,000 in November.
The digital currency sector has taken a beating this week as US crypto lender Celsius blocked withdrawals and transfers between accounts, sparking worries of contagion in markets already rattled by the loss of the terraUSD and luna tokens last month.
Expectations of speedier interest rate hikes by the United States Federal Reserve as inflation in the world’s largest economy climbs have also put pressure on riskier assets ranging from cryptocurrencies to stocks.
According to digital asset management CoinShares, crypto funds lost $102 million last week due to market expectations of stricter central bank policies.
According to CoinMarketCap data, the global crypto market has dropped 70% to less than $900 billion from a record 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.”
According to persons acquainted with the situation, Celsius has contacted restructuring lawyers and is searching for possible financing solutions from investors. Celsius is also looking into strategic options such as financial restructuring, according to the company.
Smaller cryptocurrencies, which tend to move in lockstep with bitcoin, plummeted as well. Ether, the second most valuable coin, plummeted as much as 12 per cent to $1,045, a fresh 15-month low.
The upheaval in the cryptocurrency industry has expanded to other businesses, with a number of exchanges laying off employees.
Coinbase Global Inc, a major US exchange, announced on Tuesday that it will lay off around 1,100 employees, or 18 per cent of its staff. Another US exchange, Gemini, announced last month that it will lay off 10 per cent of its personnel.
Others, however, continue to hire. Binance, the world’s largest exchange, announced on Wednesday that it was hiring for 2,000 positions, while US exchange Kraken said it was looking for 500 people.
(Adapted from NBCNews.com)