Posted: 22:09, 13 June 2022 | Updated: 22:43, 13 June 2022
The panic hit the cryptocurrency market yesterday as one of the largest companies in the industry was on the verge of collapse. In a day of slaughter for the industry, bitcoin collapsed by 20 percent to $ 23,000, its lowest level in 18 months. The digital currency, the largest in the world, has lost two-thirds of its value since peaking at $ 68,000 in November last year. Encryption crash: In a day of slaughter for the digital currency industry, bitcoin collapsed by 20% to $ 23,000, its lowest level in 18 months Ethereum, the world’s second most valuable digital currency, fell another 30 percent and fell 75 percent from its peak. The sell-off – fueled by the threat of rising interest rates as central banks struggle to curb inflation – came as cryptocurrency lender Celsius Network stopped customers making withdrawals due to “extreme market conditions”. The company’s digital currency, known as the CEL, plunged 55 percent into the aftermath of the suspension as investors feared it could be on the brink of insolvency. As the chaos spread, the Binance encryption exchange subsequently barred users from accessing their bitcoin warehouses. The collapse has left millions of people suffering from major losses. Data from the Financial Conduct Authority (FCA) published a year ago estimates that around 2.3 million British investors owned cryptocurrencies, equivalent to 4.4 per cent of the adult population. One in seven people who bought cryptocurrencies during the pandemic borrowed money to do so. Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, said: “The red lines on a chart disprove the financial pain this loss of value is going to cause to millions of cryptocurrency holders. “It’s a strong reminder that dealing with the cryptographic Wild West is extremely risky and investing in such assets should only be on the edge of a portfolio, with money you can afford to lose.” Hot water: Celsius founder Alex Mashinsky and his wife Krissy. Encryption lender stopped customers making withdrawals due to “extreme market conditions” Celsius is a decentralized financial platform, which means that it allows its users to borrow or lend their cryptocurrency in exchange for high rates of return. The company said the move would put it in a “better position to meet its withdrawal obligations over time”. Celsius – founded by tech entrepreneur Alex Mashinsky – is a major player in the cryptocurrency market, with around 1.7 million customers, and has had assets worth nearly 10 10 billion since last month. The recession was also painful for shareholders in companies linked to the encryption industry. Coinbase, which is listed on the Nasdaq digital currency exchange, fell another 9.6%, bringing its losses from last year’s peak to almost 90%. London-listed bitcoin mining Argo Blockchain has also fallen nearly 90 percent since the beginning of last year. The sell-off came as rising inflation, rising interest rates and the war in Ukraine led investors to flee high-risk assets. The latest volatility was fueled by worse-than-expected US inflation data last Friday, sparking fears that rapid prices would be harder to pull off than previously expected and paving the way for Federal Reserve interest rates to rise. . “As inflation proves to be an even tougher opponent than expected, bitcoin and ether continue to have serious bruises in the ring,” Streeter said. The value of digital currencies went up during the pandemic as many people invested cash saved during the lockdown. However, regulators have repeatedly warned of the dangers of introducing money into the cryptocurrency market, most of which are not regulated. Last month, the FCA reiterated its warning that those who bought digital currencies “should be prepared to lose all the money” they have invested. The security guard warned that the cryptographic products are not protected by financial compensation systems.
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