The world of cryptocurrencies is having something of a meltdown today as most valuations are falling into double digits. In the Celsius Network, which is related to the Celsius (CEL -25.09%) token, stopping transfers has been a catalyst, but the consequences have not been contained to any particular cryptocurrency; everything is down big.
Bitcoin (BTC -16.23%) has fallen 14.8% in the last 24 hours as of 10:30 a.m. ET, Ethereal (ETH -19.05%) has dropped by 16.8%, and doecoin (DOGE -18.67%) has dropped 15.5%.
The biggest news of the last day has been the freezing of withdrawals from Celsius Network, which scared the market as a whole. Celsius Network is a cryptocurrency lending company that connects borrowers and lenders in a decentralized network. In a blog post, the company said in part:
Due to extreme market conditions, today we are announcing that Celsius will be pausing all withdrawals, trades, and transfers between accounts. We are taking this action today to put Celsius in a better position to meet its retirement obligations over time.
Freezing transfers means people can’t borrow crypto, but it also means borrowers can’t repay their loans as crypto prices fall. The move has caused market chaos in part because traders don’t know how to manage risk when they can’t pay back secured loans and can get a margin call at any time.
Celsius Network was also supposed to be a decentralized platform that could not control users’ cryptocurrency. On their website it says “Access your coins whenever you want, keep them safe forever”.
Some of the unintended risks of cryptocurrencies are coming to light and the market doesn’t know where to turn. Even the biggest tokens like Bitcoin and Ethereum are falling with no end in sight, and news like the frozen Celsius Network transactions only exacerbates fear in the market.
It is often said that most cryptocurrencies and decentralized finance or NFT projects are not going to survive in the long run, but when they fail, they cause a spectacular reaction in the market. MoonThe recent collapse of ‘s was an example of that, and if Celsius fails, it could be another ominous sign. Leading exchange finance even paused Bitcoin withdrawals early on Monday due to a “stuck transaction.”
It is understandable that all this chaos has caused fear to take over the market. If traders are unable to make the trades they expect, it can lead to a lot of panic selling, and we may already be seeing this today.
In the long term, there are likely to be cryptocurrency projects that will change the way the economy works and add tremendous value for investors, but today we are looking at downside risk as we weed out the ones that are in for the long haul. and those that were not built. to last.