LONDON (Bywire News) - With the cryptocurrency sector seemingly burning, leading crypto lending platform Celsius has thrown another log on the fire by freezing withdrawals, swaps and transfers. The move, which has been put down to ‘market conditions’ has added to a sense of panic sweeping through the crypto sector.
Earlier in the week, Bitcoin fell a further 7.3% to its lowest point since 2020 at $20,816. It’s the continuation of a trend which has seen the world’s leading cryptocurrency down 50% on the year so far and 28% down since Friday.
Ethereum has also been on a downward spiral losing 10% and hitting lows of $1,075 whereas some smaller tokens are down 90% from their previous cycle highs.
Celsius’ decision to suspend a range of servers which prevents users from moving their funds is the latest in a series of body blows for the sector. It follows the collapse of Luna and coincides with the announcement of inflation at a 40-year high of 8.6%. The news has increased speculation that the FED will be sharper in its attitudes toward rising interest rates. With the market fearing the fallout should Celsius become insolvent, panic is spreading.
On Monday, Celsius cited extreme market conditions in a blog post explaining their reasoning for freezing withdrawals and transfers between accounts. Their aim, they say, is to “stabilise liquidity and operations while we take steps to preserve and protect assets”.
Celsius has an estimated $11.8 billion in assets and offers products to customers that bear interest through depositing crypto on their platform and then allowing people to lend out their currencies for a yield.
The crypto sector is far from the only sector experiencing volatility. A range of asset classes has been struggling in the wake of crippling inflation rates. The S&P 500 index fell for four straight days and is down more than 20% from its recent closing high.
However, the volatile nature of the crypto market means stocks have been particularly hard hit. Crypto bank Silvergate Capital shares closed down 16.7%. Prominent Bitcoin bull Michael Saylor and MicroStrategy are also down 25.2% on their infamous Bitcoin purchases. Coinbase Global has also lost 11.4%.
(Writing by Samba Jallow, editing by Tom Cropper and Klaudia Fior)