Bitcoin plunged to its lowest level in 18 months on Monday in a market without risk appetite, also damaging the suspension of withdrawals on the Celsius investment platform. As stock markets see red around the world and investors flock to the safe haven dollar, “probably the biggest carnage is in the crypto world,” said Jeffrey Halley, analyst at Oanda.
Bitcoin sees its price drop more than 10% to $24,580 around 8:40 a.m. GMT (10:40 a.m. in London), its lowest since December 2020 and a drop of more than 65% since its all-time high in November 2021. While the market of cryptocurrencies was worth more than 3,000 billion dollars at its peak seven months ago, it is approaching the bar of 1,000 billion dollars, according to the site Coingecko, which lists more than 13,000 different cryptocurrencies.
Fed rate hike weighs on markets
In 2021, this still nascent sector had supplied more and more players in traditional finance, whose risk appetite was fueled by the ultra-loose policies of central banks around the world. But the rate hike by the US Federal Reserve (Fed), which is trying to fight runaway inflation, is weighing on the markets. In addition, the decline of bitcoin accelerated “after the Celsius platform ‘suspended’ withdrawals”, comments Mark Haefele, analyst at UBS.
This company, which managed assets valued at $12 billion in mid-May according to its website, notably offered its users the opportunity to place their “historic” cryptocurrencies, such as bitcoin and ether, to invest in new cryptocurrencies.
“There is damage in the crypto space and it is likely to get worse”
In October, Celsius notably raised $400 million from the Caisse de depot et placement du Québec (CDPQ), which was pleased to partner with the “world’s leading cryptocurrency lender”. “Due to extreme market conditions, we are suspending all withdrawals and transfers between accounts,” the platform announced on Monday.
“There is breakage in the crypto space and it is likely to get worse,” warns Neil Wilson, an analyst at Markets.com. In early May, terra, a cryptocurrency that was to be priced against the dollar, crashed, causing investors concern.