Cryptocurrencies fall again and have their worst day in 2022. Understand what happened – Época Negócios

cryptocurrencies, crypto, crypto asset, cryptos, digital currencies, digital currency, bitcoin, (Photo: Unsplash)

Bitcoin, the most valuable cryptocurrency today, has dropped below $23,000, the strongest drop in 18 months (Photo: Unsplash)

the industry of cryptocurrencies faces a difficult semester in 2022 — Bitcoin, for example, has lost half its value in six months. But this Monday (13) the situation worsened, dragging the crypto market value to less than $ 1 trillion. Trading platforms halted withdrawals, companies cut jobs and investors gave up their positions.

Bitcoin, the most valuable cryptocurrency today, has dropped below $23,000, the strongest drop in 18 months, with a 15% drop in value in 24 hours. Ethereum, which lags behind bitcoin, is down 17%, according to a CNBC report. But what led to that turbulent day?

Here are three crucial points to understand what happened:

“Celsius contagion” effect

Concerns have been growing for weeks that Celsius, one of the most popular cryptocurrency lending platforms, is in the midst of a liquidity crisis. Celsius offers users returns of up to 18.63% on their deposits. It’s like a product a bank would offer, except it doesn’t have any of the regulatory safeguards.

According to the CNBC article, the company’s $26 billion in client funds has fallen by more than half since October. Celsius had previously admitted to losing funds, though it did not specify how much.

Earlier on Monday, Celsius shocked the market by announcing that all withdrawals, swaps and transfers between accounts had been paused due to “extreme market conditions”. In a memo addressed to the Celsius Community, the platform also said the move was designed to “stabilize liquidity and operations”.

“We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations,” the memo said.

Celsius effectively locked up its $12 billion worth of crypto assets under management, raising concerns about the platform’s solvency. Word has spread across the cryptocurrency industry, and shares of cryptocurrency trading platform Coinbase are down 11% to their lowest since the company went public in April 2021.

Binance Withdrawal Pause

Binance also hit the pause button on Monday. The world’s largest cryptocurrency exchange halted bitcoin withdrawals for more than three hours “due to a stuck transaction causing a delay”.

While CEO Changpeng Zhao said the fix would only take half an hour, he later amended his estimate, saying it would take “a little longer” than initially anticipated. At around 11:30 am in the United States, service was restored.

Layoffs: the “cryptographic winter”

Added to this, different companies have been increasing their layoffs to cut costs by cutting jobs. On Monday, startup BlockFi announced that it would reduce headcount by around 20%. Prior to the latest cuts, the company expanded from 150 employees at the end of 2020 to more than 850.

CEO Zac Prince said in a tweet that BlockFi was impacted by the “dramatic change in macroeconomic conditions”, which had a “negative impact” on growth.

Late last week, Crypto.com announced a headcount reduction of 260 people, just seven months after the company won the naming rights to the arena home to the NBA’s Los Angeles Lakers in a $700 million deal. Earlier this month, Gemini said it would lay off 10% of its workforce and warned that the industry is in a “phase of contraction” known as “crypto winter”.

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