Bitcoin plunged to an 18-month low after US inflation data spooked investors and crypto lender Celsius halted withdrawals, intensifying a market rout.
Bitcoin dived on the news Friday, with the rout continuing over the weekend and into Monday trading, pushing the crypto icon down some 11% to just over $23,000, the lowest price since December 2020, according to Coinbase data. So far the selloff has pushed the value of all crypto currencies to below $1 trillion for the first time since January of 2021.
Celsius Network, one of the largest global crypto lenders, said on Monday it would suspend operations due to “extreme market conditions.” The platform, which borrows crypto assets from customers and lends them out to earn profits, said it was halting withdrawals, swaps and transfers, adding that it did not know when they would resume.
“Acting in the interest of our community is our top priority,” the platform wrote on Twitter. “Our operations continue and we will continue to share information with the community.”
The pause by the crypto platform contributed to a market rout. Ether, the second largest cryptocurrency, plunged more than 8% to $1,311, its lowest level in 15 months.
“Our ultimate objective is stabilising liquidity and restoring withdrawals,” Celsius said in a statement posted on Medium. “We are taking this action today to put Celsius in a better position to honour, over time, its withdrawal obligations.”
Shock US data on Friday showed inflation at a 40-year high of 8.6%, intensifying volatility across asset classes as investors worry about potentially faster interest-rate increases.
Asset Value Plunges
Celsius Network, which raised $750 million in funding late last year, is a significant player in crypto lending, operating as a crypto platform in more than 100 countries, after entering Asia in 2019. It offers interest-bearing products to customers who deposit their cryptocurrencies with the company, and lends out crypto currencies to earn a return.
Celsius said in August last year that it had more than $20 billion in assets. But the value of assets deposited with the platform halved between December 2021 and May this year.
As of May 17, the company had processed $8.2 billion worth of loans and had $11.8 billion in assets, according to its website.
While crypto lending has become increasingly big business, the sector has come under regulatory scrutiny, particularly in the US.
Crypto markets have been under pressure in recent months, falling alongside other so-called risk assets as interest rates have risen around the world.
Price falls have also both been caused by and contributed to the collapse of some crypto projects. Most notable was the fall of stablecoin TerraUSD, which last month broke its dollar peg and collapsed in value, rocking the crypto industry.
• George Russell with Reuters