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Several enthusiasts of virtual financial markets expressed their disapproval of the move of Celsius, but some agreed to say that it could be for the protection of their users; ETH plunged to 17%.
Crypto Prices :
|ETH||−16.4%||Smart Contract Platform|
Venture capitalists had options to compare with in detailing BTC’s plummeting price.
Since December 2020, it sank to its lowest price.
The top cryptocurrency in terms of market capitalization plunged to about one-third of its highest value of approximately USD 70, 000 in the past eight months, and less than one-half of how much it was during the first part of 2022.
In twenty – four hours, it dropped to 16 percent, an uncommon scenario of having a double-digit decrease in the crypto’s value. On the other hand, it was down by about 30 percent from May, having a value of about USD 30, 000 due to the crumbled value of another token, terraUSD (UST).
It was indeed a terrible day for bitcoin, and so did for other cryptocurrencies. Computing their aggregated market capitalization, it did not reach USD 1 trillion. This was a first since 2021, despite having inflation fears and bad news from different protocols, such as crypto lending platform Celsius’ advisory that they would be pausing withdrawals due to the “extreme market conditions”.
Ether (ETH), the second only to BTC by market capitalization, has almost the equivalent decrease in value, around negative 17%. It was during the same time span as BTC’s and its lowest since 2021.
On the other hand, CRO was higher than 20 percent at an instance even with the update that cryptocurrency trading would cut off the 5 percent of its employees, almost two hundred sixty jobs. Tron (TRX) and Wrapped Bitcoin (WBTC) were also down during the same period.
With all the plunge, market analysts voiced out their views, and some even offered instantaneous consolations:
Cryptocurrency’s current adversity tracked the blow of major world stock market indexes, having tech stocks being the most affected. The S&P 500 tumbled down to 3.8 percent, rejoining the bear market – hence, it was at negative 20 percent from its previous value.
Nasdaq, an American stock exchange company, entered the bear market several weeks ago as it plummeted by 4.6 percent. On the other hand, Dow Jones Industrial Average was down by 2.7 percent.
Unexpectedly, the long-established asset – gold, also fell by almost three percent.
Now, investors surely looked out for the United States Federal Reserve’s 2-day meeting, which began last Tuesday and was extensively expected to lead up to a fifty-basis point interest rate increase because of the high inflation. The most updated United States Consumer Price Index report stated that there has been a rise of 8.6 percent, the highest in the last four decades.
Connor of 3iQ positively pointed out that cryptocurrency today is still in the range of its growth band, and corresponds to how it was for the past thirteen-plus years. Further, given the mandate of United States President Joe regarding cryptocurrency regulatory executive order, he emphasized that we are still within the band of volatility for the past 5 years.
However, we can still see that crypto is now in a terrible state, having an uncertain future in the industry.
BlockFi Trading, a platform where you can buy, sell, and trade various cryptocurrency assets, announced that it would reduce its workforce by twenty percent. Rain Financial also laid-off employees, just after Crypto.com and BlockFi’s workforce cut off.
Just this month, Binance, the largest and most known crypto trading platform, paused their clients’ withdrawals for a short time.
Blake from Uphold wrote that virtual assets will now be put to a test if a bigger increase in price will occur. He also said that at this time, extreme market conditions and federal laws are worsening the negative state of cryptocurrency.
Celsius, a well-known cryptocurrency lending platform, recently announced the pause of their customers’ withdrawals and trading of crypto products as a consequence of the current “extreme market conditions” in the midst of the economic downtrend.
Crypto tokens like bitcoin lost as much as twelve percent of the total market cap as stockbrokers reacted distressfully to the most recent United States Consumer Price Index review indicating that inflation is continuing to rise since May.
Following the mentioned lending platform’s proclamation was an order in April where Celsius announced that investors who are non – accredited are prohibited from transferring their assets.
The company’s crypto products are sought-after among crypto enthusiasts, and they provide earnings on deposits of approximately seventeen percent. This is larger compared to those offered by most financial institutions such as banks.
Throughout the time when digital asset investors are overwhelmed by the bad news, there were various opinions from different market analysts and observers. Several condemned the firm’s decision; however, others think that it was a move to protect their consumers’ funds.
According to the co-founder of Apostro – a “risk management platform that prevents economical smart contract exploits by enforcing safe economical restrictions” – Kate Kurbanova, even if Celsius’ move is not uncommon, it will unquestionably affect the firm’s clients and the company’s goal to utilize centralized financial platform because such occurrence in the centralized financial institution has been happening.
Kate, then, explained that the decision was put through during the 2020’s Black Thursday since cryptocurrencies’ prices dropped drastically at that time and made an avalanche of withdrawals on lending institutions, and their customers lost their investments.
Additionally, Kurbanova emphasized that the clients are choosing whatever risks they think of as reasonable and bearable. These include liquidations that involve risks, and strategies on decentralized applications but with the feature of allowing the users to withdraw their investments at one’s convenience.
Customers even consider utilizing centralized platforms wherein it is more certain when it comes to security, but with a downside of their money being frozen for a definite length of time.
Other industry observers found a similarity regarding the collapse of terraUSD (UST) token during the middle of May, where it drove the prices of other relative cryptocurrencies like LUNA to plummet by around one hundred percent. It also lead the Decentralized Finance’s (DeFi’s) market value to dive by USD 28B.
As per the explanation of the Vice President of WeWay (a blockchain and encryption communication technology company) and Ukrainian entrepreneur, Vadym Synegin, cryptocurrency enthusiasts easily get disturbed every single time negative news or phenomenon about the industry is mentioned.
The businessman furtherly explained that the current cryptocurrency industry responds to the panic scenarios incompetently.
Several crypto analysts suggested that Celsius had options for more competent strategies, in order to offer profit to their customers.
Austin Kimm, the Co-founder and Managing Director of Strategy of Choise.com expressed that looking for liquid assets that can yield a return of USD 1 billion is more feasible than looking for other liquid assets that can make a USD 30 B profit. As per Kimm, the sole answer to the problem is by switching off deposits or moving them into a less liquid form like real estate, or cryptocurrency mining instruments.
At the same time, the Chief Executive Officer of Iconium, a private investment company that invests in digital assets and projects that will lead the decentralized Internet era, Fabio Pezzotti, asserted that Celsius’ decision to pause withdrawals was a proactive move to support the company’s liquidity on staked ether (stETH) token to be stabilized.
Fabio added that there have been rumors regarding Celsius being busted because of Ethereum’s derivative, stETH. According to Pezzotti, Celsius was just forced to pause withdrawals in order to prevent an entire bankruptcy.
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