The bulk of cryptocurrency market analysts were negative about bitcoin’s near-term potential. Bitcoin’s decline is expected to have consequences for other crypto-related businesses.
WASHINGTON/LONDON, June 14 (Reuters) – Bitcoin held steady on Tuesday after hitting a new 18-month low earlier in the day, as major crypto lender Celsius Network froze withdrawals and the potential of significant interest rate hikes in the United States rocked the volatile asset class.
After falling as much as 7.3 percent overnight to $20,816, its lowest level since December 2020, bitcoin battled its way back into the black. It had been hovering at $22,470 at the time.
On Monday, the world’s largest cryptocurrency plunged 15%, the most in a single day since March 2020. It has lost over half of its value this year and more than 20% since Friday. It has dropped over 70% since hitting a high of $69,000 in November.
The New Jersey-based firm, citing “extreme” market conditions, This week, Celsius said that withdrawals and transfers between accounts had been halted “to stabilize liquidity and operations while we take efforts to preserve and protect assets.”
The move, combined with expectations of sharper U.S. Federal Reserve interest rate hikes after high U.S. inflation data last week, pushed the value of the crypto market under $1 trillion for the first time since January 2021. read more
The majority of cryptocurrency market watchers were negative about bitcoin’s near-term prospects.
“With the broader risk sentiment firmly bearish, the sellers have had it all their own way for a few days,” crypto firm BCB Group’s Richard Usher said. “It will require a major movement in general risk perception to drastically change the price.”
Bitcoin’s decline is expected to have consequences for other crypto-related businesses.
On Tuesday, cryptocurrency exchange Coinbase Global Inc (COIN.O) said it would slash 18% of its workforce, or about 1,100 jobs, as part of efforts to rein in costs amid volatile market conditions. read more
U.S. software firm MicroStrategy Inc (MSTR.O) – a major backer of bitcoin – said last month a drop below $21,000 would trigger a demand for extra capital against a loan secured by some of its bitcoin holdings. read more
This might lead to more bitcoin being staked against the loan or the sale of part of its large assets. Outside of work hours, the corporation did not reply to a request for comment.
MicroStrategy and Coinbase both plunged more than 5.5 percent in premarket trading on Tuesday as the decline in bitcoin roiled crypto-related companies, but by the afternoon, they were up 8.11 percent and 0.27 percent, respectively.
After falling as much as 10% to $1,075, a new 15-month low, the No. 2 token ether has recovered somewhat. Ether has dropped 75% since hitting a record high of $4,869 in November.
Celsius, which had around $11.8 billion in assets, offers interest-bearing products to customers who deposit crypto at its platform. It then lends out coins to earn a return. read more
“The market is now panicking about the impact and contagion if Celsius becomes insolvent,” wrote Singapore fund manager QCP Capital in a note.
Crypto investors were already rattled by the collapse of the TerraUSD and luna tokens in May which were shortly followed by Tether, the world’s largest stablecoin, briefly breaking its 1:1 peg with the dollar. read more
The decision by Celsius to halt withdrawals has sparked new concerns about the regulatory control of crypto-lending platforms.
On Tuesday, US Securities and Exchange Commission Chair Gary Gensler said that such platforms operate like banks and questioned how they can give such high returns.
“I issue a warning to the general population. If something appears to be too good to be true, it most likely is “He went on to say. read more
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