The Cryptocurrency Market Just Had One Of Its Worst Days Ever - Here’s What Happened
The cryptocurrency market just had one of its worst days ever. People have been saying for a while that the crypto industry is having a rough time.
Jun 20, 202254 Shares735 Views
The cryptocurrency market just had one of its worst days ever. People have been saying for a while that the crypto industry is having a rough time.
CNBC said, however, that Monday was the worst day ever for the industry. Neither the currencies nor the companies that deal in them did well.
In November of last year, the whole crypto business was riding the high waves.
Bitcoin, the most well-known digital currency, reached its all-time high value of $68,991.
Crypto.com, an app for trading cryptocurrencies, paid a huge $700 million for the right to name a sports arena in Los Angeles after itself.
Even though the prices of cryptocurrencies started to go down in the months that followed, another crypto app spent $14 million to put its quick response (QR) code on the Super Bowl screen for one minute in February.
Now, the price of Bitcoin is stuck at $22,000, while companies are taking steps to prepare for an upcoming "crypto winter."
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What Led To This?
As the world went back to how it was before the pandemic at the start of 2022, cryptocurrencies started to lose their shine.
The U.S. Federal Reserve's announcement last month of the biggest increase in interest rates in decades sent the prices of cryptocurrencies tumbling. The market values were already going down before the Fed's announcement.
Bitcoin was barely holding on when cryptocurrency companies started cutting back on spending to get ready for hard times ahead.
A few months ago, Coinbase spent millions to show off its QR code. In May, it slowed down on hiring, but as June began, it stopped hiring completely.
The company also opened an NFT marketplace in May, but it didn't get much interest. As a result, the company's plans to hire 2,000 more people this year alone were scrapped.
CNBC said that last week, Crypto.com said it was cutting its staff by 260 people, and another crypto exchange, Gemini, said it was laying off 10 percent of its staff.
The Verge reported that BlockFi, another crypto trading company, said it would be letting go of 20 percent of its employees, which is between 170 and 200 jobs.
These layoffs are similar to those that other tech companies, like Netflix, Tesla, and Cameo, have already said they will do.
But the crypto industry has been hurt by these decisions in a big way.
What Happened On Monday?
Celsius, a popular crypto platform, halted withdrawals, swaps, and transfers due to "extreme market conditions"
By locking $12 billion in crypto investments, the company sent market shockwaves.
Unrelated, Binance also halted withdrawals.
The company later clarified that the halt was temporary and due to a technical issue.
This panicked investors, who dumped Bitcoin for safer assets.
Bitcoin prices fell 15%, an 18-month low.
Ethereum's value fell 17%, CNBC reported.
Overall, the crypto industry's market cap dropped below $1 trillion, less than a third from its November peak.
Morgan Chase backs Bitcoin's recovery, but a Fed rate hike could hurt cryptocurrencies.
Worst may not be over.
The Celsius Contagion Effect
Celsius, a popular crypto staking and lending platform, is facing a cash shortage.
Celsius offers an 18.63% return on deposits.
It's like a bank product with no protections.
Cel's token dropped from $7 to 33 cents in a year.
It's dropped 50% in a week.
Celsius owns more tokens.
Since October, the company has lost $26 billion in client funds.
Celsius said it lost money in the $120 million hack of BadgerDAO, but it didn't say how much.
Celsius shocked the market by stopping withdrawals, swaps, and account transfers due to "extreme market conditions"
The platform said the change was made to "stabilize liquidity and operations"
"We're doing this to help Celsius meet its withdrawal obligations," the memo said.
People worried about Celsius's ability to pay its bills because $12 billion in crypto assets were locked up.
The news spread through the crypto industry and reminded some people of May, when a failed U.S. dollar-pegged stablecoin project lost $60 billion and pulled the whole industry down.
Monday was Coinbase's worst day since April 2021.
It was the company's biggest drop since going public.
Stefano Mclaughlin
Reviewer
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