Bitcoin collapses when cryptocurrency crashes: Thousands of investors are left to worry about heavy losses as panic pervades the Wild West market
By Callum Moorhead for the Daily Mail
Posted: 22:09, 13 June 2022 | Updated: 22:43, 13 June 2022
Panic tore apart the cryptocurrency market yesterday when one of the largest companies in the sector was on the verge of collapse.
On the day of the industry carnage, bitcoin fell 20 percent to $ 23,000, its lowest level in 18 months.
The world’s largest digital currency lost two-thirds of its value after peaking at $ 68,000 last November.
Crypto collapse: On the day of the massacre of the digital currency industry, bitcoin collapsed by 20% to $ 23,000, its lowest level in 18 months
Ethereum, the world’s second most valuable digital currency, fell another 30 percent and fell 75 percent from its peak.
The sell-off – fueled by the threat of rising interest rates as central banks struggle to curb adverse inflation – came when crypto lender Celsius Network stopped customers from making withdrawals due to “extreme market conditions”.
The company’s own digital currency, known for its CEL ticker, fell 55 percent after the shutdown as investors feared it could be on the verge of bankruptcy.
As the chaos spread, the Binance cryptocurrency exchange blocked users’ access to their bitcoins.
The collapse left millions suffering heavy losses.
The Financial Conduct Authority (FCA), published a year ago, estimates that around 2.3 million British investors own cryptocurrency, equivalent to 4.4% of the adult population.
One in seven of those who buy crypto during the pandemic has borrowed money to do so.
Susanne Streetter, a senior investment and market analyst at Hargreaves Lansdown, said: “The red lines on the chart dispel the financial pain this loss of value will cause for millions of cryptocurrency holders.
“It’s a stark reminder that dealing with cryptocurrencies in the Wild West is very risky, and investing in such assets should only be on the edge of your wallet, with money you can afford to lose.”
Hot water: Celsius founder Alex Maszynski and his wife Chrissy. Crypto lender stops customers from making withdrawals due to “extreme market conditions”
Celsius is a decentralized financial platform, which means that it allows its users to borrow or lend their cryptocurrency in exchange for high levels of returns.
The company said the move would put it in a “better position to meet its withdrawal obligations over time”.
Celsius – founded by technology entrepreneur Alex Maszynski – is a major player in the crypto market with around 1.7 million customers and last month owned assets worth nearly 10 billion pounds.
The decline was also painful for shareholders in companies involved in the crypto industry. The Nasdaq digital currency exchange Coinbase fell another 9.6%, losing from last year’s peak to almost 90%.
London-based bitcoin miner Argo Blockchain has also fallen nearly 90 percent since the beginning of last year.
The sell-off came after rising inflation, rising interest rates and the war in Ukraine forced investors to flee high-risk assets.
The latest volatility was fueled by worse-than-expected US inflation data last Friday, raising fears that rising prices will be harder to eliminate than previously expected and paving the way for the Federal Reserve to raise interest rates.
“As inflation proves to be an even more difficult opponent to win than expected, bitcoin and ether continue to suffer serious bruises in the ring,” Street said.
The value of digital currencies rose during the pandemic as many people invested money saved during the blockade.
However, regulators have repeatedly warned about the risks of putting money on the crypto market, most of which are not regulated.
Last month, the FCA reiterated its warning that those who bought digital currencies “must be prepared to lose all the money” they have invested. The Authority warned that crypto products were not protected by financial compensation schemes.
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