Crypto bank Celsius, which rocked the cryptocurrency market last week with news that it had suspended payments to customers, has now warned that it will "take time" to stabilize and normalize operations as companies across the sector face increased financial pressures from cryptocurrency sales.
Fall below $ 20,000
According to the Financial Times, the warning of this crypto bank came after a series of shocking events in the market pulled the price down. The value of bitcoin, the largest cryptocurrency by capitalization, fell below $ 20,000 over the weekend, for the first time since November 2020.
Bitcoin was traded at $ 20,762 on Monday around 1 p.m. However, the decline in the value of the largest cryptocurrency has raised questions about the possible forced liquidation of large projects in the crypto market, which in turn could cause additional sales pressure.
"As has been our priority since inception, we have maintained an open dialogue with regulators and officials regarding the suspension and it is our determination to find a solution," reads a Celsius blog post. From that platform, they also suspended communication with clients on Twitter and Reddit.
The chaos in the crypto market began when the stable cryptocurrency terraUSD stopped maintaining its peg to the dollar last month, which in turn had a negative effect on the higher "stablecoin" tether. Instability soon spread to the cryptocurrency moon, which is a key factor in decentralized finance.
The sales pressure of such deep sales in the crypto market continues to grow. Last Friday, Hong Kong crypto bank Babel Finance suspended the withdrawal of deposits, claiming it was under "unusual liquidity pressures"
In addition, Singapore’s crypto hedge fund Three Arrows has failed to recoup losses on margin loans.
And the others go down
Another crypto player from Hong Kong, cryptocurrency exchange Hoo, announced yesterday that it is suspending transactions after the withdrawal of clients has reached such proportions that the company's capital is in danger.
Recent events in the crypto market have lowered its value by two trillion dollars. The sudden drop in the market capitalization of cryptocurrencies has even raised questions about whether it could serve as a trigger for the wider US economic crisis.
However, economic and financial analysts told CNBC that there is no reason for such concern because cryptocurrencies are not tied to debt. "People don't really use cryptocurrencies as collateral for loans. Without it, it's just a paper loss."
Therefore, this problem is low on the list of challenges for the economy, "said Joshua Gans, an economist at the University of Toronto. He explained that small investors in the crypto market used cryptocurrencies to buy more of these assets, but that borrowing is limited to the crypto world.