Bitcoin Price Plunges as Crypto Lender Celsius Halts Withdrawals


The sale of Bitcoin, caused by the reversal of the buying craze that led it to rise, has now become the fourth deepest in the 13-year history of cryptocurrency.

On Monday, bitcoin fell 15% to $ 23,250.72 at 5:00 p.m. ET, according to Dow Jones Market Data, its lowest level since December 2020. That reflected a 66% drop from its high of $ 67,802.30 in November 2021. The popular digital currency fell further. at the end of the day at about $ 21,000, according to CoinDesk.

The fall of Bitcoin since November has contributed to an elimination of approximately $ 2 trillion in the broader market. Crypto’s total market capitalization, which peaked in November at nearly $ 3 trillion, stood at about $ 975 million on Monday night, according to data provider CoinMarketCap.

There are some clear reasons why Bitcoin is being sold now. On the one hand, their movements have generally been more in line with other risky assets, such as technology stocks, as professional traders have joined the crypto market in greater numbers. Speculative assets such as cryptocurrencies have been falling as high inflation persists and central banks are trying to combat it with higher interest rates. That dynamic makes riskier investments less attractive than safer assets. On Friday, the US inflation index reached 8.6%, dragging the stock market.

As the turmoil swept through the cryptocurrency market over the weekend, a widely used cryptocurrency lender froze customer withdrawals. Celsius Network LLC said it was on hold on all withdrawals, cryptocurrency exchanges and bank transfers “due to extreme market conditions.” As of May, the lender was managing $ 11 billion in user assets, according to its website.

Later, a major cryptocurrency exchange, Binance, stopped bitcoin withdrawals. The company said at 8:00 ET it was a technical issue and expected it to resume in 30 minutes. Withdrawals resumed shortly before noon, New York time.

Companies in the sector are increasingly resorting to redundancies in the midst of liquidation. A Celsius competitor named BlockFi said Monday it would cut 20 percent of its staff from about 850 employees, according to a statement from chief executive Zac Prince. “Like many others in technology, we have been affected by the dramatic change in macroeconomic conditions, which has had a negative impact on our growth rate,” Mr. wrote on Twitter. On Friday, Crypto.com said it would cut 260 employees, about 5 percent of its staff.

In addition to bitcoins and cryptocurrencies, shares traded in the cryptocurrency sector have also been punished. Microstrategy Inc.

MSTR -25.18%

fell 25% to $ 152.15. Coinbase Global Inc.

CURRENCY -11.41%

it was down 11% to $ 52.01. Riot Blockchain Inc.

REASONS -10.06%

dropped 10% to $ 4.65.

MicroStrategy, a business software company in Virginia, has grabbed its fortune on bitcoin, a strategy driven by the company’s founder and CEO Michael Saylor. The company turned all its cash reserves into bitcoins, issued debts to buy more bitcoins, and borrowed funds to buy even more bitcoins.

It had 129,000 bitcoins on its balance sheet at the end of the first quarter, the company reported. Nearly 96,000 of them had not been pledged as collateral. The rest, however, could be subject to margin calls depending on the depth of the sale.

The company has not yet received any such calls, Saylor said. “We don’t expect to receive a margin call, and the company has a lot of extra assurance if we need to post more,” he said in an email.

Individual investors, however, received margin calls. Around $ 1 billion in collateral promised by about 260,000 retailers has been settled in the last 24 hours, according to data provider CoinGlass.

The resurgence of daily trading during the pandemic and the search for assets that could yield yields as bond yields hit historic lows led bitcoin to take off in the fall of 2020. The cryptocurrency rose to historic highs in November last year. It has since lost two-thirds of its value, disproving proponents’ predictions that cryptocurrency could replace gold as a hedge against inflation and turmoil in wider markets.

“Risky, highly liquid cryptocurrencies are often the first to be sold in a marketplace,” said Jeff Mei, chief marketing officer of blockchain technology solution provider ChainUp.

Incidents such as stopping Celsius withdrawals and the previous collapse of the TerraUSD stablecoin tend to fuel fears and create a lack of confidence in the market, said Leah Wald, co-founder and CEO of asset manager Valkyrie Investments. It reverses the kind of unlimited enthusiasm that traders have for cryptography, a dynamic dubbed “hopium,” which has driven cryptocurrencies since 2020.

“Sales are created when there’s a lot of‘ hopio ’, and last year there was a lot of‘ hopio ’and euphoria for projects that didn’t have much of a base behind them,” he said.

None of this should surprise you, he said. Crypto follows exactly the same path as other asset-driven hobbies, such as technological action in the dot-com era or silver in the Hunt brothers’ time. “All assets at the end of the day follow the same trend,” he said. “As much as we think crypto is a new class of assets, it’s not.”

Write to Elaine Yu at elaine.yu@wsj.com, Joe Wallace at Joe.Wallace@wsj.com and Paul Vigna at paul.vigna@wsj.com

Corrections and Amplifications
Bitcoin sales are the fourth deepest in the 13-year history of cryptocurrency. An earlier version of this article incorrectly stated that it was the third deepest sale of bitcoins. Separately, Celsius Network, a widely used cryptocurrency lender, has frozen customer withdrawals. An earlier version of this article incorrectly stated that a widely used cryptocurrency froze customer withdrawals. (Fixed on June 13)

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