Analyst: Cryptocurrency crash not solely due to Celsius Network pausing withdrawals
The cryptocurrency market has lost more than $200 billion over the past few days, and many attribute the crash to Celsius’s withdrawal changes.
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The cryptocurrency market experienced another crash over the weekend. The total cryptocurrency market cap dropped from the $1.2 trillion level it stood at a few days ago to currently stand at $945 billion.
Bitcoin, the world’s leading cryptocurrency, has lost more than 17% of its value over the past 24 hours and currently trades around $23k per coin.
Some market experts attribute the latest crash to Celsius Network pausing its withdrawals.
Celsius Network is one of the biggest lenders in the cryptocurrency space. The company controls more than $12 billion in assets under management.
The company told its users that;
“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, swaps, and transfers between accounts. “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.”
However, Marcus Sotiriou, Analyst at the UK-based digital asset broker GlobalBlock told Coinjournal that the market crash was not solely due to the Celsius Network pausing withdrawals. He said;
“Despite the fear, uncertainty, and doubt the Celsius debacle has caused, the sell-off started at the beginning of the weekend on Friday, after the U.S. inflation data was released. CPI was reportedly 8.6% year over year in May, which is a 0.3% increase compared to April, showing that inflation is ramping up rather than slowing down. I think this is a bigger contributor to the decline we have seen, as it results in a more hawkish Federal Reserve – they are now forced to remove more liquidity from the market in order to bring down inflation. When liquidity is removed, risk-on assets are hit the hardest, which includes crypto.”
Despite the ongoing bearish sentiment, Sotiriou said investors should remember that this period of persistent inflation should pass, and the crypto industry will become more efficient as unsecure and incompetent firms are weeded out bit by bit.
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