The first half of 2022 has been awful for crypto, but few days have been as bad for the business that has grown up around digital currencies.
Trading platforms froze withdrawals on Monday, companies laid off workers, and scared investors sold their crypto assets, bringing cryptocurrency’s market cap below $1 trillion, down from $3 trillion in November.
Bitcoin has dropped below $23,000, a new 18-month low. In the last 24 hours, bitcoin, the most expensive cryptocurrency, has lost 15% of its value, while Ethereum, the second most valued cryptocurrency, has lost 17%.
Due to macroeconomic challenges and rising interest rates, investors are pulling out of the riskiest assets. But it gets even worse. The market’s reaction on Monday revealed widespread scepticism of cryptocurrencies and the platforms that support them. What had already been a severe slump began to resemble panic selling.
Here are some of the crypto lowlights from Monday:
The effect of the Celsius
Concerns have been developing for weeks that Celsius, one of the most prominent crypto staking and lending sites, is experiencing a liquidity shortage. Users can earn up to 18.63 percent on their deposits with Celsius. It’s similar to a bank product, but without any of the regulatory safeguards.
Celsius had already admitted to losing money as a result of the $120 million hack of decentralised finance network BadgerDAO, albeit it didn’t say how much.
Celsius stunned the market early Monday when it announced that all withdrawals, swaps, and account transfers had been halted due to “extreme market conditions.” The platform also stated in a statement to the Celsius Community that the decision was made to “stabilise liquidity and operations.”
The message stated, “We are taking this move today to put Celsius in a better position to honour its withdrawal obligations over time.”
Celsius’s $12 billion in crypto assets under administration has effectively been locked up, raising questions about the platform’s viability. The revelation sent shockwaves across the crypto community, recalling some of the events of May.
when a failed dollar-pegged stablecoin project in the United States lost $60 billion in value, dragging down the whole crypto industry with it.
On Monday, shares of crypto trading platform Coinbase fell 11% to their lowest level since the firm went public in April 2021.
‘Crypto winter is causing layoffs.
Start-up sponsored by Peter Thiel BlockFi has joined a growing list of cryptocurrency companies that are lowering expenses by laying off employees.
The corporation stated on Monday that it will be cutting its workforce by around 20%. Prior to the most recent layoffs, the company had grown from 150 people at the end of 2020 to over 850 by the end of 2021.
BlockFi has been damaged by the “dramatic shift in macroeconomic conditions,” which has had a “negative impact” on growth, according to CEO Zac Prince in a tweet.
It’s becoming a common motif among space industries.
Crypto.com reported a 260-person layoff late this week, barely seven months after acquiring naming rights to the NBA’s Los Angeles Lakers in a $700 million transaction. Gemini announced earlier this month that it would be cutting off 10% of its employees, warning that the industry is in a “contraction phase” known as “crypto winter.”
Meanwhile, Coinbase has decided to keep its hiring freeze in place for the “foreseeable future” and has cancelled certain employment offers.
Binance has put a halt to bitcoin withdrawals.
On Monday, Binance pressed the pause button as well. Bitcoin withdrawals were halted for almost three hours at the world’s largest crypto exchange “due to a stuck transaction producing a backlog.”
Although CEO Changpeng Zhao initially estimated that the patch would take only a half hour, he then revised his estimate, saying it would take “a little longer” than expected. Service has been restored by about 11:30 a.m.
Binance tweeted, “A batch of $BTC transactions got stuck due to low TX fees, resulting in a backlog of BTC network withdrawals.”
The exchange highlighted that deposits were “unaffected” and indicated that the glitch arose from scheduled repair work in a series of post-mortem tweets.
Customers were informed that all monies were “SAFU.” That’s a reference to Binance’s “Secure Asset Fund for Users,” which was established in 2018 to safeguard users’ assets.
During the withdrawal downtime, Zhao stated that holders could still withdraw their bitcoin via alternative networks such as CEP-20.
PS: Cryptocurrency investments are thought to be exceedingly dangerous investments. Before making any investing decisions, please contact with your financial advisor. Blockstaq is not responsible for any crypto investment.