Celsius: crypto lender sparks manic meltdown
Total value of the crypto market is now below $1trn – down from almost $3trn in November
Cryptocurrencies have become “emblematic” of the “flight from speculative assets”, as monetary policy has tightened around the world to fight inflation, said Bloomberg. This week delivered another “white-knuckle ride”. The latest trigger for big falls was “crypto lender” Celsius, which sparked panic on Monday when it froze withdrawals, citing “extreme market conditions”. In the ensuing turmoil, the values of all major coins were hit. Bitcoin dropped by 15% to $23,629; ether fell 17%; the ferocious sell-off prompted the world’s largest crypto exchange, Binance, to temporarily suspend bitcoin withdrawals. The value of the total crypto market is now below $1trn, according to CoinMarketCap – from almost $3trn in November.
Celsius, which bragged that its 1.7 million customers could “borrow like a billionaire”, had “seemed to offer the best of all worlds to crypto enthusiasts”, said Lex in the FT. Advertising “an annual percentage yield of 18.63%” on crypto deposits, it paid interest in crypto assets but also let customers borrow US dollars. The lender, which had estimated assets of $12bn in May, may now be insolvent, said Tim Hakki on Decrypt. So what happened? “The short answer: nobody really knows.” But the big worry is contagion. Unlike crypto’s last big blow-out – the collapse of TerraUSD in May – Celsius was intricately connected with many other crypto “ecosystems”.
The fear now, said Martin Peers on The Information, is “a self-perpetuating spiral, as investors liquidate their positions” to conserve capital. Most at risk are “real world” firms that have borrowed against their crypto holdings – such as MicroStrategy, a software business that has invested $4bn in bitcoin. This punishing bust may have much further to run.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
Who actually needs life insurance?
The Explainer If you have kids or are worried about passing on debt, the added security may be worth it
By Becca Stanek, The Week US Published
-
Sexual wellness trends to know, from products and therapies to retreats and hotels
The Week Recommends Talking about pleasure and sexual health is becoming less taboo
By Theara Coleman, The Week US Published
-
Is the AI bubble deflating?
Today's Big Question Growing skepticism and high costs prompt reconsideration
By Joel Mathis, The Week US Published
-
Shein: could the year’s mega-IPO fall apart at the seams?
Talking Point Latest hitch is a pre-float 'security review' that could deter potential investors
By The Week UK Published
-
Labor market strong as inflation sinks
Feature And more of the week's best financial insight
By The Week US Published
-
Midair blowout: another black mark for Boeing
Feature This isn't the first production issue Boeing has encountered
By The Week US Published
-
Behemoths of the seas
The Explainer Cruise liners keep getting bigger, with the world’s largest 'megaship' ever built set to make its maiden voyage this month.
By The Week Staff Published
-
Holiday season: Fed optimism cheers investors
Feature The feds believe their 'pivot' will make a recession unlikely
By The Week US Published
-
Older workers stay in the labor force
Feature And more of the week's best financial insight
By The Week Staff Published
-
America's most in-demand job
Feature And more of the week's best financial insight
By The Week US Published
-
Currency: the long reign of the mighty dollar
Feature Argentina is planning to drop the peso in favor of the US dollar
By The Week US Published