The crypto market crashes again as the Celsius trading platform freezes

Bitcoin and other cryptocurrencies plummeted over the weekend and Monday as high inflation sent investors out and caused major trading platforms to take over.

Bitcoin was changing hands below $ 23,000 at some point on Monday morning, 20 percent less since Friday and enough to bring down the value of the world’s dominant cryptocurrency to its lowest point since December of 2020.

The sale caused a major cryptocurrency exchange, called Celsius, to disrupt withdrawals on Sunday evening, which means investors can’t take what’s left of their money. “We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations,” said the exchange, which had about $ 11 billion in customer deposits in its books.

Celsius offered depositors more than 18 percent returns in exchange for keeping their cryptocurrencies on the company’s platform. Another Terra cryptographic platform offered similar returns to customer deposits. But that was before an increase in customer withdrawals led to the collapse of the company’s so-called “stable currency,” losing 99 percent of its value in May.

Quebec’s pension plan, the Caisse de dépôt et placement du Québec, is one of Celsius’ financial sponsors, having participated in a $ 400 million investment in the platform last November.

“Blockchain technology has the potential to disrupt various sectors of the traditional economy,” the Caisse said at the time. “As digital assets grow in adoption, we intend to capture the right opportunities, as we work with our partners toward a regulated industry.”

The Caisse did not immediately respond to a request for comment from CBC News on Monday.

Other cryptographic exchanges take over

Other major cryptocurrency exchanges also had trouble dealing with the deluge of trade orders, and Binance said it has “temporarily halted” Bitcoin withdrawals.

Other cryptocurrency trading platforms announced staff cuts. Crypto.com, which made a big impact with a brilliant announcement in which Matt Damon extolled the virtues of the cryptocurrency issued during the Superbowl, announced that it would lay off about five percent of its workforce, or 260 people, said CEO Kris Marszalek. on Twitter.

This means making difficult and necessary decisions to ensure continued and long-term sustainable growth by making specific reductions of approximately 260 or 5% of our corporate workforce.

– @kris

Another cryptocurrency company, BlockFi, announced that it was in the process of firing 20 percent of its staff.

“This decision was driven by market conditions that have had a negative impact on our growth rate and a rigorous review of our strategic priorities,” the company said in a blog post.

The sale brought the total value of all cryptocurrencies below $ 1 trillion, a threshold that has not dropped since January 2021. The value of cryptocurrencies reached a high of about $ 2.9 trillion. dollars in November 2021 before countries around the world began to see rising inflation. its highest point in decades.

On Friday, data showed that the U.S. inflation rate rose to 8.6 percent in May, the highest level in more than 40 years. Investors and market watchers expected the figure to fall from the previous month’s 8.3% level, but rose further, a worrying sign that the central bank’s efforts, such as types to curb inflation, do not work. .

“As inflation proves to be an even more difficult opponent to beat than expected, Bitcoin and ethereum continue to have a severe contusion in the ring,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“They are the main victims of the leakage of risky assets, as investors are concerned about the spiral of consumer prices around the world.”

Bags are also sold

The crypto market was not the only thing to dispel fears of stubbornly high inflation on Monday. Stock markets around the world fell sharply as speculation grows that the US Federal Reserve will have to raise its benchmark interest rate by 75 basis points on Wednesday as it struggles to curb gains uncontrolled cost of living.

Major U.S. markets, such as the Dow Jones Industrial Average, the S&P 500 and the technology-focused Nasdaq, fell three to five percent on Monday.

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Toronto residents share how they deal with inflation, from seeing what they spend in grocery stores to just shopping for essentials.

In Toronto, the benchmark stock index fell about 500 percentage points or more by two percent in the afternoon.

“No one anticipated the bear market given the strength of the economy and how we expected inflation to peak,” Ed Moya, a senior market strategist at Oanda, said in an interview with CBC. News.

“Once we start relieving inflation, you will see the markets become much calmer, [but] Until we do, the markets will remain uneasy. “

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