Bitcoin tumbles as Celsius halts withdrawals
Bitcoin fell sharply on Monday, as the sell-off across cryptocurrencies showed no sign of abating and US firm Celsius Network froze withdrawals.
The cryptocurrency lending platform, which has around 1.7m customers, also froze swap and transfers between accounts, blaming “extreme conditions market conditions".
In a blogpost, it said: “We are taking this action today to put Celsius in a better position to honour, over time, its withdrawal obligations.
“We’re taking this necessary action for the benefit of our entire community in order to stabilise liquidity and operations while we take steps to preserve and protect assets.
“There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.”
Shortly afterwards, cryptocurrency exchange Binance halted the withdrawal of bitcoins. The company insisted customer funds were safe, and blamed the move on a backlog in the company’s systems.
As at 1430 BST, bitcoin had lost 12% and was trading at its lowest levels since the end of 2020, tumbling below $24,000 to reach $23,375.9. Ethereum, the second largest token after bitcoin, was 16% lower, at $1,205.15.
The value of the digital asset market has now fallen below $1trn to touch a low of $940bn. Like traditional assets, cryptocurrencies have become vulnerable to the weakening global economic outlook alongside concerns about the market's stability.
The sell-off then ramped up on Friday, following weaker-than-expected inflation numbers in the US, and after ethereum’s developers announced that a long-awaited transition to version 2.0 had been postponed.
Marcus Sotiriou, analyst at GlobalBlock, said: “Despite the fear, uncertainty and doubt the Celsius debacle has caused, the sell-off started at the beginning of the weekend after US inflation data was released.
“I think this is a bigger contributor to the decline, as its results in a more hawkish Federal Reserve. It is now forced to remove more liquidity from the market, to bring down inflation. When liquidity is removed, risk-on asets are hit the hardest, which includes crypto.”
Walid Koudmani, chief market analyst at xtb, said: “Almost all altcoins are wiping out gains made in 2020 as sentiment around cryptocurrencies was worsened on Friday by alarming data from the US economy.
“It is not very surprising to see such a strong downturn as we have noticed an increased correlation over the last few years between traditional stocks, which have also tanked recently, and the cryptocurrency market.”