Bitcoin Halts Big Losses, But Pessimism Reigns in Crypto Markets

LONDON, June 14 (Reuters) – Bitcoin steadied on Tuesday after hitting a fresh 18-month low, as a freeze on withdrawals from major crypto lender Celsius Network and the prospect of sharp U.S. interest rate rises They rocked the volatile asset class.

Bitcoin clawed its way into positive territory after falling as much as 7.3% to $20,816, its lowest level since December 2020. It was hovering around $22,399 last time.

The world’s largest cryptocurrency fell 15% on Monday, its biggest one-day drop since March 2020. It has lost roughly half its value this year and more than 20% since Friday alone. Since its all-time high of $69,000 in November, it has plunged almost 70%.

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Citing “extreme” market conditions, New Jersey-based Celsius said this week it had frozen withdrawals and transfers between accounts “to stabilize liquidity and operations while we take steps to preserve and protect assets.”

The move, combined with expectations of steeper interest rate hikes from the US Federal Reserve following high-inflation data from the US last week, pushed the value of the crypto market below $ 1 billion for the first time since January 2021. read more

Most crypto market watchers were pessimistic about the immediate prospects for bitcoin.

“With the broader risk sentiment firmly negative, sellers have been getting away with it for a few days,” said Richard Usher of crypto firm BCB Group. “It will take a change in general risk sentiment to change the price significantly.”

The drop in Bitcoin is likely to have ramifications for other companies exposed to the crypto market.

On Tuesday, cryptocurrency exchange Coinbase Global Inc (COIN.O) said it would cut 18% of its workforce, or about 1,100 jobs, as part of efforts to control costs amid volatile market conditions. market.

US software firm MicroStrategy Inc (MSTR.O), a major backer of bitcoin, said last month that a drop below $21,000 would trigger a demand for additional capital against a loan secured by some of its bitcoin holdings. read more

That could cause him to bet more bitcoins against the loan or trigger the sale of some of his vast holdings. The company did not immediately respond to a request for comment outside of business hours.

MicroStrategy and Coinbase were down 6.5% and 5.5% respectively in premarket trading on Tuesday, as bitcoin’s decline weighed on crypto-related stocks.

The number 2 token ether also rallied a bit after losing as much as 10% to $1,075, a new 15-month low. Ether is down 75% from its all-time high of $4,869, reached in November.

bitcoin chart

“PANIC”

Celsius, which had about $11.8 billion in assets, offers interest-bearing products to customers who deposit cryptocurrencies on its platform. Then lend coins for a return. read more

“The market is now panicking over the shock and contagion if Celsius becomes insolvent,” Singaporean fund manager QCP Capital wrote in a note.

Cryptocurrency investors were already baffled by the collapse of TerraUSD and Luna tokens in May, which was followed shortly after by Tether, the world’s largest stablecoin, briefly breaking its 1:1 peg to the dollar. read more

Celsius’s move to suspend withdrawals has raised new questions about the regulatory oversight of such crypto lending platforms.

On Tuesday, US Securities and Exchange Commission Chairman Gary Gensler said at an event that such platforms were operating similarly to banks and questioned how some platforms could offer such huge returns.

“I warn the public. If it seems too good to be true, it may be,” he added. read more

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Reporting by Tom Wilson and Elizabeth Howcroft in London, additional reporting by Sujata Rao in London, Alun John in Hong Kong, and Katanga Johnson in Washington; Edited by Muralikumar Anantharaman, Emelia Sithole-Matarise, Michelle Price, and Chizu Nomiyama

Our standards: the Thomson Reuters Trust Principles.

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