Bitcoin at 18-Month Below – Reasons and Expectations
Cryptocurrencies fell again on Tuesday; Bitcoin and Ether are at a new 18-month low; After the freeze on withdrawals by the Celsius, Network caused the latest fluctuations in the asset class for investors. BTC fell 7.2 percent to a total of $20,816; This is the lowest since December 2020, dropping by 15 percent on Monday.
The world’s largest cryptocurrency to date by more than 50 percent; And decreased by 28 percent after Friday. Ether lost 10 percent to a total of $1,075; This is the lowest since January 2021. Smaller tokens suffered even more damage.
The sale was triggered by a suspension of withdrawal by Celsius; Also, on Friday, high U.S. inflation data led to expectations of a sharper interest rate hike from the Federal Reserve. According to QCP Capital, the market is now in a panic over the impact and transfer; If Celsius becomes insolvent.
The change in Celsius led to a shift in cryptocurrencies; Their value fell below $1 trillion on Monday; For the first time since January 2021. This has led to concerns about diverting the route to other assets or companies. According to the CEO of Swan Bitcoin, almost everything in crypto can be systemic because the whole space is overloaded.
In a statement released during Asian Hours on Monday, Celsius said; That It froze funds and transfers between accounts to stabilize liquidity and operations; Before steps are taken to maintain and protect the assets.
Bitcoin and Celsius
New Jersey-based Celsius, which has approximately $11.8 billion in assets, offers interest-containing products to clients who deposit cryptocurrencies on the platform. It then issues a loan to the cryptocurrencies to get a refund. Cryptocurrencies are a symbol of speculative investment flight as monetary policy tightens around the world to combat price pressures; To drain liquidity from global markets.
Asset classes also shook due to high inflation; Investors threw risky assets. The S&P index fell for four consecutive days; The benchmark is now down more than 20 percent on the close of the most recent record to prove it according to the commonly used definition of a bear market. Cryptocurrency stocks have been particularly hard hit. Shares of Silvergate Capital closed 16.7 percent higher on Monday; MicroStrategy fell 25.2 percent; Coinbase Global lost 11.4 percent.
Winter and Inflation
The worst inflation in the U.S. in four decades is causing a crypto collapse; This will reduce the market capitalization of the sector below $ 1 trillion for the first time since January 2021. More than $ 2 trillion worth has been written off since November 10th. The latest route will be heavily followed by the spectacular collapse of the Stabilcoin TerraUSD in May. This token should have been safe because it was backed by another token tied to the U.S. dollar.
Experts say winter is coming. However, some believe it has already come. Predict constant weakness as different forces come together to build other sales; This will even miss more investors from the market, As well as new buyers becoming more risk-averse. Worse still, a downward spiral of forced sales may occur; Lenders apply for loans secured by crypto assets, Which will fall below the loan’s value and further reach the values.
Many lenders have taken out crypto mortgages; Suddenly, the collateral costs less, so the loan is called. In some cases, when the value of crypto collateral falls below the value of the loan, The lender may sell the crypto, which could lead to a cascading effect of falling values; Consequently, more forced sales.
One of the world’s largest crypto lenders has had to suspend withdrawals. Celsius borrowed crypto assets and borrowed or placed them elsewhere, thus taking advantage of the spread between the two. The company’s ultimate goal is to stabilize liquidity and recover cash withdrawals.