The company Celsius Network, which acts as a crypto lender in the industry, also caused uncertainty. She announced that withdrawals and transfers between accounts would be paused due to “extreme market conditions”. There is a sell-off mood in the market, said Timo Emden of Emden Research.
Bitcoin fell back below the $25,000 mark for the first time since December 2020. The oldest cyberdevise slipped in the top by around 18 percent to $ 23,950. For Ethereum, things went even more downhill. The cryptocurrency was at times almost 30 percent lower at $1176. This was the lowest level since January 2021. According to stock market traders, the crash awakened memories of the price slump in the cyber currency TerraUSD, which shook the crypto industry in mid-May.
The concern that the US Federal Reserve could raise interest rates even more strongly than previously thought, given the continued high inflation, took away the appetite of investors for riskier investments such as cryptocurrencies at the beginning of the week. “Investors on both sides of the Atlantic are saying goodbye to the idea that the US Federal Reserve is embarking on a comfortable rate hike cycle,” said Emden. At the beginning of May, the Fed made the biggest interest rate hike in 22 years and raised the key interest rate by half a point to the new range of 0.75 to 1.0 percent. Investors fear that an excessive increase in interest rates could stall the economy. Bitcoin has lost almost 50 percent of its value since the beginning of the year. Another Fed rate decision is due on Wednesday.
Celsius Network fuels uncertainty
In this situation, the announcement by Celsius Network to suspend withdrawals and transfers between accounts accelerated the decline of cyber currencies. The company said in a blog post: “We are taking this necessary action to stabilize liquidity and operations as we take steps to preserve and protect assets.”
Celsius Network lends cryptocurrencies, issues loans secured with cryptocurrencies and offers savings products for customers who invest their cyber currencies with the company. On its website, the company advertises with annual returns of up to 17 percent. As of May 17, the company had settled $8.2 billion worth of loans and $11.8 billion in assets under management, according to the website.