Bitcoin (BTC) drops as market focuses on Celsius issue and Fed rate hike – Reuters News in France and abroad

Bitcoin and other cryptocurrencies have fallen sharply as investors dump risky assets. A crypto credit company called Celsius is suspending withdrawals for its clients, sparking fears of contagion in the wider market.

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Bitcoin fell below $25,000 late on Sunday, hitting its lowest level since December 2020, as investors dumped the crypto amid a broader sell-off in risky assets.

Meanwhile, a crypto credit company called Celsius has suspended withdrawals for its clients, sparking fears of contagion in the wider market.

The world’s largest cryptocurrency bitcoin was trading around $24,653.99 as of 4:24 a.m. ET Monday, according to data from CoinDesk.

Over the weekend and up to Monday morning, over $150 billion has been wiped from the entire cryptocurrency market.

Macroeconomic factors are contributing to the decline in crypto markets, with runaway inflation continuing and the US Federal Reserve expected to raise interest rates this week to control rising prices.

Last week, US indices sold off sharply, with the tech-heavy Nasdaq falling sharply. Bitcoin and other cryptocurrencies have tended to be correlated with stocks and other risky assets. When these indexes fall, the crypto also falls.

“Since November 2021, sentiment has changed dramatically given Fed rate hikes and inflation management. We are also potentially eyeing a recession as the FED may finally have to tackle the demand side to manage inflation,” Vijay Ayyar, vice president of business development and international at crypto exchange Luno, told CNBC.

“All of this indicates that the market hasn’t completely bottomed out and unless the Fed is able to breathe a bit, we are unlikely to see a return to the upside. »

Ayyar noted that in previous bear markets, bitcoin has fallen around 80% from its last all-time high. Currently, it is down about 63% from its last all-time high which it reached in November.

“We could see much lower bitcoin prices over the next two months,” Ayyar said.

Celsius “adds fuel to the fire”

The crypto market has also been at the forefront since mid-May when the so-called algorithmic stablecoin terraUSD, or UST, and its luna, the sister cryptocurrency, collapsed.

Now the market is concerned about a crypto credit company called Celsius which said on Monday it was suspending all withdrawals, trades and transfers between accounts “due to extreme market conditions”.

Celsius, which claims to have 1.7 million customers, advertises to its users that they can earn an 18% return through the platform. Users deposit their crypto at Celsius. This crypto is then loaned out to institutions and other investors. Users then get a return from the revenue generated by Celsius.

But the selloff in the crypto market hurt Celsius. The company had assets worth $11.8 billion as of May 17, up from more than $26 billion in October last year, according to its website.

CEL, which is Celsius’ own coin, is down more than 50% in the last 24 hours, according to CoinGecko. Investors are worried about a wider contagion in the crypto market.

“The Celsius situation is definitely adding fuel to the fire,” Ayyar said.

“Globally, markets were already under pressure from inflation concerns and interest rate hikes, but with crypto, such contagion events could lead to outsized declines, given how tightly bound the market is these days. these to a variety of interconnected protocols and companies. »

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Bitcoin (BTC) drops as market focuses on Celsius issue and Fed rate hike – Reuters News in France and abroad

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