Bitcoin fell below $24,000 on Monday, the lowest level for it since December 2020, as investors fled the cryptocurrency amid a broader sell-off in risk assets.
Meanwhile, a crypto loan company named Celsius has halted withdrawals for its customers, raising concerns about market contagion.
According to CoinDesk data, the world's largest cryptocurrency bitcoin fell below the $24,000 level and was trading around $23,325 at 10 a.m. on Wall Street, a 15 per cent loss.
Over the weekend and into Monday morning, the cryptocurrency market had lost more than $200 billion. According to CoinMarketCap data, the cryptocurrency market capitalization went below $1 trillion on Monday for the first time since February 2021.
With rampant inflation continuing and the US Federal Reserve anticipated to raise interest rates this week to contain increasing prices, macro issues are contributing to bearishness in the crypto markets.
Last week, US indices fell dramatically, with the tech-heavy Nasdaq leading the way. Bitcoin and other cryptocurrencies have historically had a positive correlation with stocks and other risk assets. When these indices fall, crypto falls with them.
“Since Nov 2021, sentiment has changed drastically given the Fed rate hikes and inflation management. We’re also potentially looking at a recession given the FED may need to finally tackle the demand side to manage inflation,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said.
“All this points to the market not completely having bottomed and unless the Fed is able to take a breather, we’re probably not going to see bullishness return.”
Ayyar pointed out that in prior bear markets, bitcoin has plummeted roughly 80 per cent from its previous record high. It is currently down roughly 63 per cent from its all-time high, which it reached in November.
“We could see much lower bitcoin prices over the next month or two,” Ayyar said.
Since mid-May, when the so-called algorithmic stablecoin terraUSD, or UST, and its sister cryptocurrency luna crashed, the crypto market has been on edge as well.
The market is now concerned about Celsius, a crypto loan company that said on Monday that it is suspending all withdrawals, swaps, and transfers between accounts "because to extreme market conditions."
Celsius, which claims to have 1.7 million customers, advertises to its consumers that the platform may provide a 18 per cent yield. Celsius accepts cryptocurrency deposits. This cryptocurrency is then lent to institutions and other investors. As a result of the revenue earned by Celsius, users receive yield.
However, the crypto market downturn has harmed Celsius. According to its website, the company's assets were valued $11.8 billion as of May 17, down from more than $26 billion in October of previous year.
According to CoinGecko, CEL, Celsius' own coin, is down more than 50 per cent in the previous 24 hours. Investors are concerned about broader crypto market contagion.
“The Celsius situation is definitely adding fuel to the fire,” Ayyar said.
(Source:www.cnbc.com)
Meanwhile, a crypto loan company named Celsius has halted withdrawals for its customers, raising concerns about market contagion.
According to CoinDesk data, the world's largest cryptocurrency bitcoin fell below the $24,000 level and was trading around $23,325 at 10 a.m. on Wall Street, a 15 per cent loss.
Over the weekend and into Monday morning, the cryptocurrency market had lost more than $200 billion. According to CoinMarketCap data, the cryptocurrency market capitalization went below $1 trillion on Monday for the first time since February 2021.
With rampant inflation continuing and the US Federal Reserve anticipated to raise interest rates this week to contain increasing prices, macro issues are contributing to bearishness in the crypto markets.
Last week, US indices fell dramatically, with the tech-heavy Nasdaq leading the way. Bitcoin and other cryptocurrencies have historically had a positive correlation with stocks and other risk assets. When these indices fall, crypto falls with them.
“Since Nov 2021, sentiment has changed drastically given the Fed rate hikes and inflation management. We’re also potentially looking at a recession given the FED may need to finally tackle the demand side to manage inflation,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said.
“All this points to the market not completely having bottomed and unless the Fed is able to take a breather, we’re probably not going to see bullishness return.”
Ayyar pointed out that in prior bear markets, bitcoin has plummeted roughly 80 per cent from its previous record high. It is currently down roughly 63 per cent from its all-time high, which it reached in November.
“We could see much lower bitcoin prices over the next month or two,” Ayyar said.
Since mid-May, when the so-called algorithmic stablecoin terraUSD, or UST, and its sister cryptocurrency luna crashed, the crypto market has been on edge as well.
The market is now concerned about Celsius, a crypto loan company that said on Monday that it is suspending all withdrawals, swaps, and transfers between accounts "because to extreme market conditions."
Celsius, which claims to have 1.7 million customers, advertises to its consumers that the platform may provide a 18 per cent yield. Celsius accepts cryptocurrency deposits. This cryptocurrency is then lent to institutions and other investors. As a result of the revenue earned by Celsius, users receive yield.
However, the crypto market downturn has harmed Celsius. According to its website, the company's assets were valued $11.8 billion as of May 17, down from more than $26 billion in October of previous year.
According to CoinGecko, CEL, Celsius' own coin, is down more than 50 per cent in the previous 24 hours. Investors are concerned about broader crypto market contagion.
“The Celsius situation is definitely adding fuel to the fire,” Ayyar said.
(Source:www.cnbc.com)
