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Crypto in Freefall as Platforms Halt Withdrawals

Binance follows Celsius in suspending withdrawals, leading to panic online.

Ollie Smith 13 June, 2022 | 7:32AM
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Bitcoin

Cryptocurrency trading platform Celsius has suspended withdrawals this morning, fuelling a broader crypto price crash around the world. Binance has also suspended Bitcoin withdrawals, citing technical problems.

The price of Bitcoin has been on a downward trajectory for some time, and has lost 50% so far in 2022. Though things really started to tumble on June 9, when a single coin cost broke below the US$30,000 level. At 12:44pm this morning BST, it had fallen to US$23,663, a fall of over 10% on the day.

Other coins have been affected by the negative sentiment too. On June 9 Ether was trading at US$1,786, but is now US$1,198. Dogecoin, regarded by some as a meme and others as a public health problem, is trading at just five U.S. cents. Terra's implosion in recent weeks has triggered a bout of high volatility in cryptocurrencies.

In a blog post trendily captioned “a memo to the Celsius community” posted this morning, Celsius said it had suspended trading on its platform due to market volatility. 

“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, swap, and transfers between accounts. We are taking this action today to put Celsius in a better position to honour, over time, its withdrawal obligations,” it said.

“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.

“We are taking this necessary action for the benefit of our entire community in order to stabilise liquidity and operations while we take steps to preserve and protect assets. Furthermore, customers will continue to accrue rewards during the pause in line with our commitment to our customers.”

Danni Hewson, financial analyst at AJ Bell, observes upsetting scenes within the cryptocurrency internet community.

“When you read that suicide hotline numbers have been pinned to the sub-Reddit for Terra after users took to the forum to share their heart-breaking stories you can’t help but be moved,” she says.

“Terra’s fall has had a knock-on to other cryptocurrencies, including Bitcoin, which is down to 16-month lows. There’s plenty of talk about increasing regulation of the space, but for those who’ve lost what they couldn’t afford to lose it comes too late. Market volatility is expected to remain for the foreseeable future and it’s hard not to make knee jerk moves but history teaches that up follows down and sometimes the right move is not to move.”

 

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Ollie Smith   is editor of Morningstar UK.

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