What is the Reason for the Current Crypto Crash

Celcius to blame for the latest Crypto crash. For the first time since December 2020, the price of Bitcoin has dipped below $25,000. It’s the most recent in a string of price drops for the cryptocurrency, which has seen its value plummet by more than 60% in the last seven months. The Crypto Crash has shed more than $400 billion of the total value of the market. According to data aggregator CoinGecko, the global crypto industry’s present value is less than $1.0 trillion. This is down from a high of more than $3 trillion just seven months ago. 

Bitcoin’s price has dropped about 11% in less than 24 hrs, closing in at 23k on Monday morning since the announcement from Celsius. According to Coinbase, bitcoin was trading at $23,510.15 at 4:53 p.m. EAT. Bitcoin was last that low in December 2020 and peaked at $69,000 on November 9th, 2021.

Recently the crypto slump has coincided with a comparable capitulation of tech equities. According to Simon Peters, an analyst at the online trading site eToro, the two have become more linked. The reasons for this are varied, but much of it comes down to institutional investors calibrating their risk assets similarly, be they tech stocks or bitcoin.

How Celcius is Involved

Celsius, a crypto lending platform, has seen its cel coin plummet 50% in the previous 24 hours after the firm suspended withdrawals due to “extreme market conditions,” raising fears of an impending collapse, according to this article from Forbes

Celsius suspended all withdrawals from its platform due to what it termed “extreme market conditions” as cryptocurrency prices went into free fall. The company said it needed time to “stabilize liquidity and operations” Celsius chief executive Alex Mashinsky hit out at critics on Twitter, accusing them of spreading FUD.

Cryptocurrency traders had been nervously watching the likes of Celsius, fearing similar high-interest accounts could also collapse. Celsius allows investors to earn interest on their crypto holdings as well as use it as collateral for loans. After the dramatic collapse of the terraUSD (UST) stablecoin and its support coin luna last month, crypto traders were worried about the future of UST and Celsius.

Cryptocurrency traders had been keeping a close eye on companies like Celsius, fearful that comparable high-interest accounts would fail. Celsius allows investors to earn interest on their cryptocurrency holdings while allowing them to utilize it as collateral for loans. Crypto traders were concerned about the survival of UST and Celsius after the sudden collapse of the terraUSD (UST) stablecoin and its support coin luna last month.

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