Over the weekend, Ethereum (ETHE) and Bitcoin (BTC) fell by over 10% ahead of the stock market sell-off of Black Monday, June 13, 2022. While the S&P 500 (SPY) officially fell into a bear market, Celsius halting bitcoin withdrawals mattered more.
Celsius, like TerraUSD and Luna, offered speculators a generous yield that was too good to be true. As more people took advantage of the returns amid a previously zero-interest-rate environment, Celsius owed more payouts to customers.
Celsius needed a blockchain. With its open ledger technology, it could issue CEL tokens. This enabled it to raise money from investors. The presale of CEL tokens began at 20 cents a token in Q4/2017. Crowdsale started at 30 cents a token in March 2018.
When Bitcoin’s prices started to fall rapidly, Celsius had a margin call. It halted withdrawals and transfers amid a liquidity crisis.
Investors who buy stocks on margin know all too well that when stocks fall, brokers will margin call. The crypto-lending firm Celsius Network faced the same problem. The crumbling financial situation will shake up the most levered firms and individuals.
Regulation of the cryptocurrency will come too little and too late. Millions of Luna and Celsius holders will lose money.
