Crypto has had one of the worst days ever, with its signature coin “Bitcoin” dropping to an 18-month low, falling below $23,000 after it tumbled 15% in only 24 hours. Other major coins like Ethereum, fell by 17%. The sell-off in crypto comes as a standard investor reaction to the broader macroeconomic trends growing in the background. Indeed, headwinds caused by rising interest rates, inflation, and the broader fear of recession, have placed the riskiest assets like crypto the first on the chopping block. The sell-off may be even worse than that because unlike the last few weeks which were already brutal for crypto, the most recent drop’s price action was so quick and volatile it could point towards a broader and more fundamental mistrust in crypto, and the platforms supporting them. In short, what was already a steep decline has become a full-blown panic sell.
The sell-off was so brutal that many trading platforms froze withdrawals. Moreover, many companies in the space cut jobs, and panicked investors dumped their assets, nose-diving the market cap of crypto below $1 trillion (three times less than its peak in November). One example of the crash effects, on a company level, comes from Celsius which is one of the largest players in the crypto lending space. Celsius announced that: “Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swaps, and transfers between accounts,” the company said in a memo to clients on Monday. It’s truly something to note that many large companies like Celsius had to stop operations altogether. What do you think about the crypto market’s volatility?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.