Business Briefing

Celsius: crypto lender sparks manic meltdown

Total value of the crypto market is now below $1trn – down from almost $3trn in November

Cryptocurrencies have become “emblematic” of the “flight from speculative assets”, as monetary policy has tightened around the world to fight inflation, said Bloomberg. This week delivered another “white-knuckle ride”. The latest trigger for big falls was “crypto lender” Celsius, which sparked panic on Monday when it froze withdrawals, citing “extreme market conditions”. In the ensuing turmoil, the values of all major coins were hit. Bitcoin dropped by 15% to $23,629; ether fell 17%; the ferocious sell-off prompted the world’s largest crypto exchange, Binance, to temporarily suspend bitcoin withdrawals. The value of the total crypto market is now below $1trn, according to CoinMarketCap – from almost $3trn in November. 

Celsius, which bragged that its 1.7 million customers could “borrow like a billionaire”, had “seemed to offer the best of all worlds to crypto enthusiasts”, said Lex in the FT. Advertising “an annual percentage yield of 18.63%” on crypto deposits, it paid interest in crypto assets but also let customers borrow US dollars. The lender, which had estimated assets of $12bn in May, may now be insolvent, said Tim Hakki on Decrypt. So what happened? “The short answer: nobody really knows.” But the big worry is contagion. Unlike crypto’s last big blow-out – the collapse of TerraUSD in May – Celsius was intricately connected with many other crypto “ecosystems”. 

The fear now, said Martin Peers on The Information, is “a self-perpetuating spiral, as investors liquidate their positions” to conserve capital. Most at risk are “real world” firms that have borrowed against their crypto holdings – such as MicroStrategy, a software business that has invested $4bn in bitcoin. This punishing bust may have much further to run. 

Recommended

27 of the best hotels to discover in 2022
Spa at The Retreat at Elcot Park
In Focus

27 of the best hotels to discover in 2022

Recipe: tomato and chipotle chilli soup
Tomato and chipotle chilli soup
On the menu

Recipe: tomato and chipotle chilli soup

The timeless charm of Poland’s Lower Silesia
Colourful buildings
The big trip

The timeless charm of Poland’s Lower Silesia

Grade II homes for £500,000 or less
Corner Cottage
The wish list

Grade II homes for £500,000 or less

Popular articles

Are we heading for World War Three?
Ukrainian soldiers patrol on the frontline in Zolote, Ukraine
In Depth

Are we heading for World War Three?

What happened to Logan Mwangi?
Tributes left to Logan Mwangi
Today’s big question

What happened to Logan Mwangi?

Nato vs. Russia: who would win in a war?
Nato troops
Today’s big question

Nato vs. Russia: who would win in a war?

The Week Footer Banner