Adedapo Adesanya
By Adedapo Adesanya
Bitcoin (BTC) tumbled below $25,000 on Monday, hitting its lowest level since December 2020, as investors dump crypto amid a broader sell-off in risk assets.
As at press time, the world’s most valued currency is selling at $24,116.22 after a 12.3 per cent drop.
Over the weekend and into Monday morning, more than $200 billion had been wiped off the entire cryptocurrency market.
The cryptocurrency market capitalisation fell below $1 trillion on Monday for the first time since February 2021, according to data sourced by Business Post from CoinMarketCap.
Macro factors are contributing to the bearishness in the crypto markets, with rampant inflation continuing and the U.S. Federal Reserve expected to hike interest rates this week to control rising prices.
The market has been on edge since mid-May when the so-called algorithmic stablecoin TerraUSD (UST), and its sister cryptocurrency Luna collapsed.
Now, the market is concerned about a crypto lending company called Celsius which said on Monday that it’s pausing all withdrawals, swap and transfers between accounts “due to extreme market conditions.”
Celsius, which claims to have 1.7 million customers, advertises to its users that they can get a yield of 18 per cent through the platform. Users deposit their crypto with Celsius. That crypto is then loaned out to institutions and other investors. Users then get yield as a result of the revenue Celsius earns.
However, the crypto market sell-off has hurt Celsius. The company had $11.8 billion worth of assets as at May 17, down from more than $26 billion in October last year, according to its website.
CEL, which is Celsius’ own coin, is down more than 50 per cent in the last 24 hours, and this is pushing investors concern about broader contagion in the crypto market.
Asides from the Russian – Ukraine war, the selloffs then got intensified when the United States central bank, the Federal Reserve hiked its interest rate to 1 per cent, the largest increase since 2000, as it handed down its policy decision in May.
