Bitcoin and other cryptocurrencies continued to slide on Tuesday as investors rescued from risky assets in anticipation of sharp interest rate hikes to cope with inflation.
Nerves remain raw after two of the world’s largest cryptocurrency platforms limited activity on Monday while the broader market breakdown continued rapidly.
Celsius Network, which has 1.7 million customers, said that “extreme market conditions” had forced it to temporarily stop all withdrawals, cryptocurrencies and transfers between accounts.
“We are taking this necessary action for the benefit of our entire community to stabilize liquidity and operations while taking steps to preserve and protect assets,” the company said in a blog post.
The UK-listed company has around $ 3.7 billion in assets, according to the website. It pays interest on cryptocurrency deposits, and lends them out to provide returns.
“Celsius’ suspension of withdrawals yesterday gave extra downward momentum,” noted Jeffrey Halley, senior market analyst, Asia Pacific, at Oanda. “I can only assume that the next big level for bitcoin psychologically will be $ 20,000.”
The cryptocurrency market has been hit hard in recent months after the pandemic boom began to fall. As the world’s major central banks have raised interest rates to curb inflation like a spiral, traders have been quick to stop making more risky investments, including their volatile cryptocurrencies.
Bitcoin, the world’s most valuable cryptocurrency, fell around 8% on Tuesday, falling below $ 23,000. It has lost about 25% of its value since Friday – setting it at about 67% below the all-time high in November last year, when it traded around $ 69,000, according to data from Coinbase.
Ether, the second most valuable digital coin, fell 4%, taking its loss since Friday to around 32%. It has now lost about 75% of its value since November.
Binance, the world’s largest cryptocurrency exchange, suspended withdrawals on its bitcoin network for a few hours on Monday. The company said some transactions had stalled and caused a backlog.
“The Binance team is working on a long-term solution to accelerate pending transactions on the bitcoin (BTC) network and prevent similar situations in the future,” it said in a statement.
So-called “stablecoins” – cryptocurrencies linked to the value of more traditional assets – have also been hit. Tether, a popular stable coin, broke the bond to the US dollar in May, pointing out that it could serve as a hedge against volatility.
TerraUSD, a more risky algorithmically stable currency that used complex code to link value to the US dollar, collapsed the same month, wiping out savings for thousands of investors. The coin was valued at just over $ 18 billion in early May before crashing, according to data from CoinMarketCap.
Celsius Network did not say when it would allow customers to withdraw their deposits again, only that it would “take time.”
Meanwhile, governments are closely monitoring the fallout from cryptocurrency and can move to protect investors.
“There are a lot of risks associated with cryptocurrencies,” US Treasury Secretary Janet Yellen told the Senate last month. She said her department should release a report on the case.
– Julia Horowitz contributed with reporting.