Bitcoin fell to a fresh 18-month low on Wednesday, bringing smaller tokens down with it and sparking a dramatic drop in crypto markets triggered by crypto lender Celsius suspending client withdrawals.
The world’s biggest cryptocurrency dropped 7.8 percent to $20,289, its lowest level since December 2020. It has lost almost 28% of its value since Friday and more than half of its value this year. It has fallen over 70% from its all-time high of $69,000 in November.
Cryptocurrencies have taken a beating this week as US crypto lender Celsius suspended withdrawals and transfers between accounts, fueling worries of a bigger fallout in digital asset markets already spooked by the loss of the terraUSD and luna tokens last month.
Expectations of speedier interest rate rises by the United States Federal Reserve as inflation in the world’s largest economy climbs have also put pressure on riskier assets ranging from cryptocurrencies to equities.
According to Digital Asset Manager CoinShares, crypto funds lost $102 million last week due to market expectations of stricter central bank policies. According to CoinMarketCap estimates, the global crypto market is now worth less than $900 billion, down from a record of $2.97 trillion in November.
“The ripples running through the market haven’t stopped yet,” said Scottie Siu, investment director at Hong Kong-based Axion Global Asset Management. “I think we’re still in the middle of it unfortunately, the game isn’t over.”
According to persons acquainted with the situation, Celsius has contacted restructuring attorneys and is searching for alternative funding solutions from investors. Celsius is also looking at strategic options such as financial restructuring, according to the company.
Smaller cryptocurrencies, which tend to move in lockstep with bitcoin, plummeted as well. Ether, the second most valuable coin, plummeted as much as 12% to $1,045, a fresh 15-month low.