The crash in cryptocurrencies is worsening.
The price of Bitcoin (BTC) has fallen below $24,000 U.S., hitting its lowest level since December 2020, as investors continue to dump cryptocurrencies amid a broader market selloff.
Over the weekend and into today (June 13), more than $200 billion U.S. had been wiped off the entire cryptocurrency market. The cryptocurrency market capitalization is now below $1 trillion U.S. for the first time since February 2021, according to data from CoinMarketCap.
While Bitcoin’s price dropped 12% over the weekend, the price of Ethereum (ETH), the second largest cryptocurrency, fell nearly 20% to right around $1,200 U.S. Other digital assets such as Litecoin (LTC) and Bitcoin Cash (BCH) were down more than 15% each.
Meanwhile, a cryptocurrency lending company called “Celsius” has paused withdrawals for its customers, sparking fears of contagion in the cryptocurrency sector.
Macro economic factors are contributing to the bearishness in the cryptocurrency market, with rampant inflation continuing and the U.S. Federal Reserve expected to further raise interest rates this week to control rising prices.
Last week, U.S. indices sold off heavily, with the tech-laden Nasdaq dropping sharply. Bitcoin and other cryptocurrencies have tended to correlate with stocks and other risk assets. When these indices fall, cryptocurrencies drop as well.
The cryptocurrency market has also been on edge since mid-May when the so-called algorithmic stablecoin TerraUSD (UST) and its sister cryptocurrency Luna (LUNA) collapsed.
Now, the market is concerned about cryptocurrency lending company Celsius which said on Monday that it’s pausing all withdrawals, swaps, and transfers between accounts because of “extreme market conditions.”
Celsius, which claims to have 1.7 million customers, advertises to its users that they can get a yield of 18% through the platform. Users deposit their cryptocurrencies with Celsius. That crypto is then loaned out to institutions and other investors. Users get yield as a result of the revenue Celsius earns.
But the cryptocurrency market selloff has hurt Celsius. The company had $11.8 billion U.S. worth of assets on May 17 this year, down from more than $26 billion U.S. in October of last year, according to its website.
CEL, which is Celsius’ own digital coin, is down more than 50% in the last 24 hours, according to CoinGecko.
