Bitcoin has hit a fresh 18-month low, falling below $US25,000 ($35,600) for the first time since December 2020, as a prominent crypto lender froze withdrawals and economists warn that the digital currency is in for more misery.
Bitcoin plummeted to $US24,900 at 1pm AEST on Monday before recovering somewhat to $US25,500, a drop of 7% in 24 hours.
The world’s most popular cryptocurrency was worth as high as $US68,000 in November 2021, but it has since dropped by about 63 percent in just seven months, according to crypto specialists.
On Sunday, Euro Pacific Capital chief economist Peter Schiff said, “This might be a difficult weekend for crypto.”
“Bitcoin appears to be on the verge of collapsing below $US20,000, and Ethereum to $US1000.
“If that’s the case, the total market cap of roughly 20,000 digital tokens would plummet to just $US800 billion, down from nearly $US3 trillion at its peak.” This dip should not be purchased. You’re going to lose a lot more cash.”
Solana, cardona, dogecoin, polkadot, tron, and avalanche are among the smaller cryptocurrencies that have had double-digit decreases in value in the last 24 hours.
Ethereum, the world’s second most popular digital coin, dropped by 20% over the weekend, to $US1946, its lowest level since March 2021.
Meanwhile, The Celsius Network, one of the world’s largest cryptocurrency lenders, declared it was “pausing all withdrawals, Swap, and transfers between accounts.“
The company’s website advertised an annual income of 18.63 percent on cryptocurrency deposits and assured users that their crypto holdings would be “secure forever.”
“Today, we are announcing that Celsius is stopping all withdrawals, Swaps, and transfers between accounts due to extraordinary market conditions,” the company told its 1.7 million members on Monday.
“We are taking this measure today to better position Celsius to meet its withdrawal obligations over time.”
“We recognize that this is distressing news, but we believe that suspending withdrawals, Swaps, and account transfers is the most responsible measure we can take to protect our community.” We are working with a single goal in mind: to protect and maintain assets in order to meet our customer obligations.
“Our ultimate goal is to restore liquidity as rapidly as possible, including withdrawals, swaps, and transfers between accounts.” As we explore numerous choices, there will be a lot of work ahead of us; this process will take time, and there may be delays.”
Celsius’s holdings are crypto-related: the company apparently borrowed $US500 million from the dollar-pegged stablecoin Tether, with bitcoin as collateral.
“If bitcoin falls in value, they issue a margin call, and we have to give them more bitcoin,” Celsius CEO Alex Mashinsky told The Financial Times last year.
In November, Celsius’s chief financial officer was arrested in Israel on suspicion of money laundering, fraud, and sexual assault.
It comes following the mid-May meltdown of stablecoin Terra, with US lawmakers promising to introduce new rules to regulate stablecoins before the end of the year.
Experts have also warned of an impending ethereum merging crisis. The cryptocurrency will switch from the proof-of-work mechanism used by bitcoin to the more energy-efficient proof-of-stake scheme.
Proof-of-stake eliminates the need for cryptocurrency miners, instead requiring consumers to stake their currencies to check new transactions and add them to the blockchain, a procedure that might use 99 percent less energy than proof-of-work.
However, the shift will be postponed until August after ethereum co-founder Vitalik Buterin discovered a so-called “difficulty bomb,” a mechanism within ethereum designed to make mining more difficult.
The CEO of financial advising and asset management business deVere Group, on the other hand, predicts a major price increase in bitcoin in the fourth quarter of this year.
“The price rebound has begun, much to the displeasure of crypto cynics and bitcoin detractors,” Nigel Green stated last week, before the collapse on Monday.
“I anticipate the world’s leading digital currency will have a bull run soon, leading to a substantial bounce in the fourth quarter of the year.”
“Bitcoin is currently highly tied to prominent global stock markets, such as Wall Street’s S&P500, and I’m certain that the recent market decline is nearing its end and that a rally is on the horizon.”
He noted that a stock market rally will assist Bitcoin as investors return to riskier assets.