Bitcoin price on Tuesday plunged and other cryptocurrencies plummeted after a major cryptocurrency lender effectively failed and halted all withdrawals from its platform, citing “extreme market conditions.”
It’s the latest high-profile collapse of a pillar of the cryptocurrency industry. These meltdowns have erased tens of billions of dollars of investors’ assets and spurred urgent calls to regulate the freewheeling industry.
Bitcoin’s price on Tuesday fell 13.10 per cent to $22,301.50. Ethereum, the world’s second largest cryptocurrency, fell 12.75 per cent to $1,197.70.
“Bitcoin plummeted to $21,000 in the past 24 hours, with increased selling pressure following the rise of inflation in the US. Bitcoin traded at its lowest on Monday since December 2020. If sellers are determined, Bitcoin can also fall to US$20,000,” Edul Patel, co-Founder and CEO of Mudrex, said.
“Bitcoin is down by more than 49 per cent since the beginning of the year and 66 per cent from its all-time high at US$68,990 in 2021,” Patel said.
BITCOIN, CRYPTOCURRENCY PRICES FELL
Investors have been selling riskier assets such as digital currencies and technology stocks as the Federal Reserve raises interest rates to combat high inflation.
On Sunday, the cryptocurrency lending platform Celsius Network announced that it was pausing all withdrawals and transfers between accounts in order to “honor, over time, withdrawal obligations.” Celsius, with roughly 1.7 million customers and more than $10 billion in assets, gave no indication in its announcement when it would allow users to access their funds.
In exchange for customers’ deposits, the company pays out extremely generous yields, upwards of 19 per cent on some accounts. Celsius takes those deposits and lends them out to generate a return.
Lending platforms such as Celsius have come under scrutiny recently because they offer yields that normal markets could not support, and critics have called them effectively Ponzi schemes.