The world’s largest cryptocurrency fell as much as 7.8 percent to USD 20,289, its lowest since December 2020. It has lost around 28 percent since Friday and more than half of its value this year. It has slumped about 70 percent from its record high of USD 69,000 in November.
The digital currency sector has been pummelled this week after US crypto lender Celsius froze withdrawals and transfers between accounts, stoking fears of contagion in markets already shaken by the demise of the terraUSD and Luna tokens last month.
Expectations of sharper US Federal Reserve interest rate hikes as inflation in the world’s biggest economy soars have also heaped pressure on risky assets from cryptocurrencies to stocks.
Crypto funds saw outflows of USD 102 million last week, according to digital asset manager CoinShares, citing investors’ anticipation of tighter central bank policy.
The value of the global crypto market has tumbled 70 percent to under USD 900 billion from a peak of USD 2.97 trillion in November, CoinMarketCap data shows.
“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.”
Celsius has hired restructuring lawyers and is looking for possible financing options from investors, the Wall Street Journal reported, citing people familiar with the matter. Celsius is also exploring strategic alternatives including a financial restructuring, it said.
Smaller cryptocurrencies, which tend to move in tandem with bitcoin, also fell. Ether, the second largest token, fell as much as 12 percent to USD 1,045, a new 15-month low.
The chaos in the crypto market has spread to other companies, with a number of exchanges slashing workforces.
Major US exchange Coinbase Global Inc said on Tuesday it will cut about 1,100 jobs, or 18 percent of its workforce. Gemini, another US exchange, said this month it would cut 10 percent of its workforce.
Some of the major exchanges perceive the current downturn as part of the boom and bust nature – which has been an ongoing theme since their inception – of cryptocurrencies and are continuing to hire. Binance, the world’s largest exchange, said on Wednesday it was hiring for 2,000 positions, and US exchange Kraken said it had 500 roles to fill.
“Hunker down,” tweeted Binance CEO Changpeng Zhao.
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