Crypto Lender Celsius Freezes Withdrawals, Fuels Market Rout
Suvashree Ghosh and Sidhartha Shukla
Sun, June 12, 2022,
(Bloomberg) -- Celsius Network Ltd. paused withdrawals, swaps and transfers on its platform, fueling a broader market selloff as traders continued to question the sustainability of high-yielding tokens in the wake of the Terra blockchain collapse.
Celsius’s CEL token was down 31% to 24.2 cents as of 12:42 p.m. in Hong Kong, according to pricing data site CoinGecko, underperforming amid a slump in crypto assets that sent Bitcoin to its lowest level since December 2020.
Doubts about the sky-high yields backing protocols such as Celsius have intensified after Terra’s collapse in May and as tighter monetary policy from global central banks curbs demand for riskier assets. The CEL token promises “actual financial rewards,” including as much as 30% extra returns weekly, according to its website.
“The plunge of Celsius’s token $CEL seems to be a realization of the contagion risk of UST/LUNA into similar financial tools,” said Burak Tamac, senior analyst, regulatory and on-chain at CryptoQuant.
Lending and borrowing protocols underperformed, with their market caps down 10% compared with 6.4% fall in broader crypto universe, according to CoinGecko. Celsius peers Aave, Maple and Compound were down 7.5%, 14% and 9%, respectively.
“We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations,” the platform said in a memo on its website, adding that users will continue to accrue rewards during the pause.
Celsius’s moves come as cryptocurrencies are struggling more broadly. Bitcoin fell as much as 8.9% Monday, while Ether dropped as much as 12%. Both are declining for a seventh straight session.
Crypto lender Celsius pauses withdrawals, transfers citing 'extreme market conditions'
Manish Singh
Sun, June 12, 2022,
Celsius Network, one of the biggest crypto lenders, told customers Sunday evening that it is pausing withdrawals, swap, and transfers between accounts in a move that has sparked discussions and prompted the price of the firm's token to take a 60% tumble in the past one hour to as low as 19 cents.
"We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations," wrote Celsius, which counts stablecoin-issuer Tether International, growth equity fund WestCap Group and Canadian pension fund Caisse de Dépôt et Placement du Québec among its investors.
"Acting in the interest of our community is our top priority. In service of that commitment and to adhere to our risk management framework, we have activated a clause in our Terms of Use that will allow for this process to take place. Celsius has valuable assets and we are working diligently to meet our obligations."
Celsius, which was valued at $3.25 billion when it extended its "oversubscribed" Series B financing round to $750 million in November, allows users to deposit their Bitcoin, Ethereum and Tether and receive weekly interest payments. Depending on the time horizon and the token, the platform offers as much as 18% interest a year. On its website, Celsius says 1.7 million people call "Celsius their home for crypto."
The announcement follows one of the brutal weekends in the cryptocurrency market that saw hundreds of millions of dollars worth of liquidation. At the time of publication, Bitcoin was trading at about $25,585 and Ethereum at $1,346, some of their lowest levels in over a year. Other high-profile crypto projects including Solana, BNB and FTT were also down.
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Crypto lenders are facing increased scrutiny following the collapse of Terraform Labs' Luna and its sister token UST last month. Alex Mashinsky, chief executive of Celsius Network, has been trying reassure customers in recent weeks, saying that they can withdraw their assets at any time and questioned skeptics. The firm also launched a recurring promotion recently, offering customers rewards if they transferred assets into Celsius accounts and help positions for up to 180 days.
But Celsius has also grappled with high sell-offs in recent months. The lender says on its website that it has about $3.8 billion of assets, down from $24 billion it disclosed in late December 2021.
“The beauty of what Celsius managed to do is that we deliver yield, we pay it to the people who would never be able to do it themselves, we take it from the rich, and we beat the index. That’s like going to the Olympics and getting 15 medals in 15 different fields," Mashinsky said in a video streamed in December.
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Bitcoin Plunges Below $25K, Lowest Level Since December 2020
Shaurya Malwa
Mon, June 13, 2022
Bitcoin (BTC) plummeted under $25,000 on Monday morning amid weakness in the macroeconomic environment and systemic risk from within the crypto market, data shows.
The asset has slid for nearly twelve straight weeks, falling from nearly $49,000 in March 2022 to under $25,000. It showed some signs of bottoming out in mid-May, but worrying U.S. inflation data released last week did little to cushion falling sentiment.
The consumer price index (CPI), the most widely tracked benchmark for inflation, rose 8.6% on a year-over-year basis in May, topping expectations that it would decline to 8.2% from April's 8.3%, as reported.
Such data contributed to a fall in Asian markets on Monday. Hong Kong’s Hang Seng fell nearly 3.5%, Japan’s Nikkei 225 fell 3.01%, while India’s Sensex dropped 2.44%. Futures of U.S. technology-heavy index Nasdaq opened 2% lower, while S&P500 fell 1.65%.
According to price-charts, bitcoin had strong support at the $29,000 mark, but the fall below that level now means that the cryptocurrency could drop to its 2017 high of nearly $20,000.
Readings on the Relative Strength Index (RSI) – a tool used by traders to calculate the magnitude of an asset’s price move – dropped under 30, suggesting a reversal could be on the way as short-term buyers react to technical data.
Bitcoin RSI dropped under 30 this week, technical indicators show. (TradingView)
Elsewhere, crypto lender Celsius paused withdrawals citing “extreme market conditions,” fueling crypto twitter concerns that the company may not have enough liquidity to pay out its depositors.
Shaurya Malwa
Mon, June 13, 2022
Bitcoin (BTC) plummeted under $25,000 on Monday morning amid weakness in the macroeconomic environment and systemic risk from within the crypto market, data shows.
The asset has slid for nearly twelve straight weeks, falling from nearly $49,000 in March 2022 to under $25,000. It showed some signs of bottoming out in mid-May, but worrying U.S. inflation data released last week did little to cushion falling sentiment.
The consumer price index (CPI), the most widely tracked benchmark for inflation, rose 8.6% on a year-over-year basis in May, topping expectations that it would decline to 8.2% from April's 8.3%, as reported.
Such data contributed to a fall in Asian markets on Monday. Hong Kong’s Hang Seng fell nearly 3.5%, Japan’s Nikkei 225 fell 3.01%, while India’s Sensex dropped 2.44%. Futures of U.S. technology-heavy index Nasdaq opened 2% lower, while S&P500 fell 1.65%.
According to price-charts, bitcoin had strong support at the $29,000 mark, but the fall below that level now means that the cryptocurrency could drop to its 2017 high of nearly $20,000.
Readings on the Relative Strength Index (RSI) – a tool used by traders to calculate the magnitude of an asset’s price move – dropped under 30, suggesting a reversal could be on the way as short-term buyers react to technical data.
Bitcoin RSI dropped under 30 this week, technical indicators show. (TradingView)
Elsewhere, crypto lender Celsius paused withdrawals citing “extreme market conditions,” fueling crypto twitter concerns that the company may not have enough liquidity to pay out its depositors.
A HEDGE AGAINST INFLATION THEY SAID
Bitcoin Tumbles to 18-Month Low as US Inflation Impact Spreads
Joanna Ossinger and Suvashree Ghosh
Sun, June 12, 2022
(Bloomberg) -- Bitcoin plunged to the lowest in about 18 months in Asia trading Monday as the impact of Friday’s shock US inflation data continued to reverberate through global risk assets.
The world’s largest digital token tumbled as much as 8.9% to $24,903.49 -- its lowest since December 2020. Other cryptocurrencies also declined as a broader sell-off continued. The MVIS CryptoCompare Digital Assets 100 Index, which measures 100 of the top tokens, dropped as much as 9.7%.
“Cryptos remain at the mercy of the Fed and stuck in a merry dance with the Nasdaq and other risk assets,” said Antoni Trenchev, co-founder and managing partner of crypto lender Nexo. “We’re hearing Bitcoin forecasts in the mid-teen and single-digit thousands which tells you the type of macro environment crypto is facing for the first time -- and the levels of fear.”
Traders are boosting bets for a more aggressive pace of Federal Reserve tightening after data Friday showed US inflation jumped to a fresh 40-year high in May. Cryptocurrencies, which have struggled amid the Fed’s policy in recent months, have been hit particularly hard. The collapse of the Terra/Luna ecosystem last month, and lender Celsius pausing withdrawals Monday morning Asia time, have further eroded confidence in the space.
“Typically, I’d suggest being a buyer here” on Bitcoin futures, said Rick Bensignor, president of Bensignor Investment Strategies and a former strategist at Morgan Stanley. “But if you do get long, perhaps think about doing so with either a long call spread or short put spread to limit risk. If this dives, there’s no reliable support nearby.”
Other coins were also having a difficult time, with Ether off as much as 12% to its lowest level since February 2021. Avalanche dropped as much as 15%, Solana up to 14% and Dogecoin as much as 11%.
“If Ethereum continues to bleed toward $1,200 (the 200-week moving average) the outlook for other altcoins becomes even bleaker,” Trenchev said.
Bitcoin Tumbles to 18-Month Low as US Inflation Impact Spreads
Joanna Ossinger and Suvashree Ghosh
Sun, June 12, 2022
(Bloomberg) -- Bitcoin plunged to the lowest in about 18 months in Asia trading Monday as the impact of Friday’s shock US inflation data continued to reverberate through global risk assets.
The world’s largest digital token tumbled as much as 8.9% to $24,903.49 -- its lowest since December 2020. Other cryptocurrencies also declined as a broader sell-off continued. The MVIS CryptoCompare Digital Assets 100 Index, which measures 100 of the top tokens, dropped as much as 9.7%.
“Cryptos remain at the mercy of the Fed and stuck in a merry dance with the Nasdaq and other risk assets,” said Antoni Trenchev, co-founder and managing partner of crypto lender Nexo. “We’re hearing Bitcoin forecasts in the mid-teen and single-digit thousands which tells you the type of macro environment crypto is facing for the first time -- and the levels of fear.”
Traders are boosting bets for a more aggressive pace of Federal Reserve tightening after data Friday showed US inflation jumped to a fresh 40-year high in May. Cryptocurrencies, which have struggled amid the Fed’s policy in recent months, have been hit particularly hard. The collapse of the Terra/Luna ecosystem last month, and lender Celsius pausing withdrawals Monday morning Asia time, have further eroded confidence in the space.
“Typically, I’d suggest being a buyer here” on Bitcoin futures, said Rick Bensignor, president of Bensignor Investment Strategies and a former strategist at Morgan Stanley. “But if you do get long, perhaps think about doing so with either a long call spread or short put spread to limit risk. If this dives, there’s no reliable support nearby.”
Other coins were also having a difficult time, with Ether off as much as 12% to its lowest level since February 2021. Avalanche dropped as much as 15%, Solana up to 14% and Dogecoin as much as 11%.
“If Ethereum continues to bleed toward $1,200 (the 200-week moving average) the outlook for other altcoins becomes even bleaker,” Trenchev said.
Bloomberg Businessweek
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