Posted by Trouble hit the cryptosphere on Monday, but accelerated throughout the week as risk sentiment continued to erode in the broader market. The latest catalyst came from the most recent inflated CPI reading – which showed prices rising 8.6% Y/Y in May – though the downturn quickly picked up pace across the entire sector. Bitcoin (BTC-USD) came close to falling below $20,000 – close to the peak of the crypto’s last major bull run in 2017 – while Binance Coin (BNB-USD), Bitcoin Cash (BCH-USD) and Ethereum (ETH-USD) also slipped deep into the red.
And not helping the situation was an announcement from Celsius, which is one of the largest crypto lending platforms (topping $20B in assets last August). The DeFi giant paused all withdrawals due to “extreme market conditions,” as its CEL digital token (CEL-USD) went into freefall, plunging over 50% over the course of 24 hours. Celsius also suspended its swap and transfer products by “activating a clause in our Terms of Use that will allow for this process to take place.”
The debacle is another dose of bad news for the crypto market, which was just dealt a wake-up call following the collapse of “not so stable” stablecoin TerraUSD (UST-USD) in May. Celsius has also run afoul of regulators, with some users blaming the platform for heavy financial losses by promoting them to hold CEL as collateral for loans. The digital token even promises “actual financial rewards” on its website – including as much as 30% extra in weekly returns – but the latest news is likely to dent faith in highly-touted crypto projects.
“From the next cycle’s view, we are probably near the bottom but that doesn’t mean that price can nuke 50% further. FWIW, I don’t think we are at the bottom yet coz conferences are still full, crypto parties are still extravagant, still seeing excesses among teams, macro environment is still weak. The layoffs have started but not widespread yet. Stay strong and manage your positions well.”
Bobby Ong, co-founder of crypto price-tracking company CoinGecko.
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