Hong Kong, June 14 (BUS): Cryptocurrencies tumbled again on Tuesday, with bitcoin and ether dropping to 18-month lows, after crypto lender Celsius Network delivered the latest shockwave to investors in the asset class.
Bitcoin slumped as much as 7.2% to $20,816, its lowest level since December 2020, to extend its 15% drop on Monday, Reuters reports.
The world’s largest cryptocurrency is down over 50% year-to-date and 28% since Friday.
Token Ether No. 2 lost as much as 10% to $1,075, its lowest level since January 2021, and the smaller coin took a further hit.
Singapore fund manager QCP Capital said in a note that the sell-off was a result of the suspension of withdrawals in Celsius and high US inflation data on Friday that led to expectations of a sharper rate hike from the Federal Reserve.
“The market is now in a panic about the impact and contagion if Celsius becomes insolvent,” QCP said.
Citing harsh market conditions, Celsius said in a blog post published in Asia Hours on Monday that it has frozen withdrawals and transfers between accounts “to stabilize liquidity and operations while we take steps to preserve and protect assets.”
New Jersey-based Celsius, which has around $11.8 billion in assets, offers interest bearing products to customers who deposit cryptocurrency through its platform. Then he lends cryptocurrency to earn a return.
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Asset classes across the board were shaken by rising inflation as investors dumped risky assets.
The S&P has fallen for four consecutive days, with the benchmark now down more than 20% from its record closing high to confirm a bear market according to a commonly used definition.
Cryptocurrency stocks in particular have been hit hard.
Crypto Bank’s Silvergate Capital shares closed down 16.7% Monday, BTC buyers and business intelligence software provider MicroStrategy plunged 25.2%, and crypto exchange Coinbase Global lost 11.4%.