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Physical representations of bitcoins at a cryptocurrency exchange near the Grand Bazaar in Istanbul, Turkey, on October 20, 2021 (AFP/Ozan KOSE)
Bitcoin fell to its lowest level in 18 months on Monday, overwhelmed by investors’ lack of risk appetite, and the cryptocurrency market briefly fell below the symbolic threshold of $1 trillion.
The suspension of cryptocurrency investment platform Celsius and the brief freeze on bitcoin withdrawals from the world’s largest platform, Binance, contributed to the lack of appetite for cryptocurrencies.
As stock markets look red around the world and investors flock to the safe-haven dollar, “probably the biggest carnage is in the crypto world,” commented Jeffrey Halley, an analyst at Oanda.
Bitcoin saw its price drop more than 15% on Monday, falling to $22,603, the lowest since December 2020 and a drop of more than 66% from its all-time high in November 2021.
The cryptocurrency market, which was worth more than $3 trillion at its peak seven months ago, temporarily fell below the $1 trillion threshold before rising to $1.008 trillion around 4:10 p.m. GMT, according to the site. Coingecko, which lists over 13,000 different cryptocurrencies.
By 2021, this still-nascent sector had attracted more and more traditional financial players, whose risk appetite was fueled by the ultra-loose policies of central banks around the world.
But the rate hike by the Federal Reserve (Fed), which is trying to fight runaway inflation, is weighing on markets.
Graph showing the price of bitcoin since January 2017 (AFP/)
Additionally, bitcoin’s decline accelerated “after the Celsius + platform suspended + withdrawals,” notes Mark Haefele, an analyst at UBS.
This company, which managed assets valued at 12,000 million dollars in mid-May according to its website, in particular offered its users the opportunity to place their “historic” cryptocurrencies, such as bitcoin and ether, to invest in new cryptocurrencies.
In October, Celsius notably raised $400 million from the Caisse de Depot et Placement du Québec (CDPQ), which was pleased to partner with the “world’s leading cryptocurrency lender.”
“Due to extreme market conditions, we are suspending all withdrawals and transfers between accounts,” the platform announced on Monday.
“There is a breakout in the crypto space and it is likely to get worse,” warns Markets.com analyst Neil Wilson.
The largest cryptocurrency buying platform, Binance, announced on its Twitter account on Monday that the withdrawal of bitcoins was “temporarily suspended”.
The company announced a few hours later that these recalls had resumed.
In early May, terra, a cryptocurrency that was reportedly priced against the dollar, crashed, sparking concern among investors.