Crypto News: Another cryptocurrency collapse is likely, which will bring down even more important companies.
The Latest in Crypto: Investors are worried about a larger contagion that could bring down other important market players as a result of a liquidity problem at the bitcoin loan business Celsius.
The unexpected halting of any and all account withdrawals by Celsius raised concerns that the company would soon be forced to declare bankruptcy. A bank-like service is provided by the company to its consumers in the form of a loan. However, these loans are made without the strict insurance requirements that are typical for traditional lenders.
On Tuesday, the price of bitcoin dropped below $21,000, extending the dramatic declines seen the previous day and dropping even further into 18-month lows. CoinMarketCap says that the total value of all digital tokens has fallen below $1 trillion for the first time since the start of the year 2021.
Investors in cryptocurrencies are afraid that the inevitable failure of Celsius will worsen the harm that has already been felt by the market in the wake of the failure of Terra, a stablecoin effort with a market cap of $60 billion. Although Celsius was an investor in Terra, the company only had a “small” share in the project.
CNBC made many attempts to get comment from Celsius, but the company did not respond.
“Everyone is really bracing for further decline in the near term,” said Mikkel Morch, executive director of crypto hedge firm ARK36. “Everyone is really bracing for more downside in the medium term.”
“Because bear markets tend to reveal flaws and overleveraged businesses that were previously hidden, it’s likely that we’ll see more events like the Terra ecosystem’s collapse last month,”
Monsur Hussain, senior director of financial institutions at Fitch Ratings, says that selling off Celsius’s assets would “further disrupt the valuation of cryptoassets, causing a bigger wave of contagion in the crypto world.”
