Investors left nursing heavy losses as Bitcoin market crashes

By Michael V. Bolgent

Administrator

Posted: June 13, 2022 at 10:10 PM, Updated: June 13, 2022 at 10:10 PM

Bitcoin

Yesterday, the cryptocurrency market was in a state of panic because one of the biggest companies in the field was close to going out of business.

On a day of horror for the industry, Bitcoin fell 20% to $23,000, its lowest level in 18 months.

Since peaking at $68,000 in November last year, the world’s largest digital currency has lost two-thirds of its value.

Ethereum, the second most valuable digital currency in the world, dropped another 30%, bringing its total loss to 75% since its high.

The sell-off was sparked by the possibility of higher interest rates as central banks try to rein in spiraling inflation. Crypto lender Celsius Network also halted withdrawals owing to ‘extreme market conditions.’

Investors worried the company was on the verge of insolvency. The company’s own digital currency, known as CEL, plummeted 55% after the suspension.

As the pandemonium spread, Binance, a cryptocurrency exchange, banned users from accessing their bitcoin assets.

Millions of people have suffered significant losses as a result of the financial crisis.

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A year ago, the Financial Conduct Authority (FCA) said that 4.4 percent of adults in the UK, or about 2.3 million investors, owned bitcoin.

One out of every seven people who bought cryptocurrency during the pandemic did so with borrowed funds.

“Red lines on a chart belie the financial pain which this loss of value is set to cause for millions of crypto holders,” Susannah Streeter, senior investing and markets analyst at Hargreaves Lansdown, said.

“It’s a stark reminder that dabbling in the crypto Wild West is highly risky and investments in such assets should only be at the edges of a portfolio, with money you can afford to lose,” says the author.

Celsius is a platform for decentralized finance that lets people borrow or lend their bitcoin for big returns.

The move, according to the company, will put it in a “better position to honor its withdrawal obligations over time.”

Celsius, which was created by internet entrepreneur Alex Mashinsky, is a key player in the crypto market, with over 1.7 million customers and assets worth nearly £10 billion as of last month.

Shareholders in crypto-related companies have also suffered as a result of the decline. The digital currency exchange Coinbase, which is listed on the Nasdaq, fell another 9.6%, bringing its losses since last year’s peak to about 90%.

A London-listed bitcoin miner called Argo Blockchain has also lost nearly 90% of its value since the beginning of last year.

Investors moved away from high-risk assets because inflation was going up, interest rates were going up, and there was a war in Ukraine.

Worse-than-expected US inflation figures released last Friday sparked fears that increasing prices might be more difficult to dislodge than previously thought, clearing the way for the Federal Reserve to raise interest rates.

As inflation proves to be an even trickier opponent to beat than expected, bitcoin and ether are continuing to get severe bruising in the ring, “Streeter added.

During the epidemic, the value of digital currencies skyrocketed as many people invested money saved during the lockdown.

On the other hand, regulators have warned many times about the risks of investing in the mostly unregulated crypto market.

Last month, the Financial Conduct Authority (FCA) reiterated its warning that those who invest in digital currencies “should be prepared to lose all of their money.” According to the watchdog, financial compensation methods do not protect cryptographic items.

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