- The course of events of the cryptocurrency’s fall
- What happened to Celsius?
- Massive layoffs of crypto market employees
- The reason for the blocking of Binance
- El Salvador remains optimistic
- Why is crypto falling?
The start of a new week has once again brought a shock to the crypto market. The value of the crypto benchmark, bitcoin, has plummeted. The fall of the cryptocurrency intensified after the publication of the message from Binance and Celsius about the blocking of BTC withdrawals.
Overall, the crypto market’s total capitalization has lost more than two-thirds of its value since peaking in November, according to Coinmarketcap, falling from $3 trillion at the top to $962 billion as of Monday evening New York time.
By Monday evening, bitcoin (BTC) was hovering around $23,000, having lost 15.8% in the past 24 hours and dangling at levels not seen since mid-December 2020. Meanwhile, Ethereum (ETH) fell 16.3% to $1,229 in the same period.
ADA token Cardano, the fourth-largest cryptocurrency by market capitalization, excluding Stablecoin, performed better than most, down 9.28% from 51 cents per coin to 46 cents.
According to Coinmarketcap, the top losers include the CEL token of the Celsius network, down 21.5% from 37 cents to 29 cents in the last 24 hours. NFT and crypto-related stocks also showed declines during Monday’s trading.
By comparison, the Nasdaq Composite was down 4.7% by market end at its lowest level since September 2020. The S&P 500 lost 3.9% on Monday.
Cryptocurrency holders began withdrawing their assets from exchanges en masse as the fall began. As a result, Celsius and Binance stopped withdrawals.
Binance returned bitcoin withdrawals Monday afternoon, while the Celsius network offered no further clarity, with its digital token CEL dropping 50%. As of May 27, the firm holds $12 billion in customer funds. Experts believe the cause is a lack of liquidity.
BlockFi CEO Zach Prince has repeatedly stated publicly that he has never been involved in the Celsius network projects and does not hold Ethereum, the crypto collateral that analysts have cited as one of the reasons the company may need to suspend withdrawals. Yet, a BlockFi spokesperson confirmed previous reports of a 20% reduction in its workforce.
That, too, has had an impact on prices, and the panic continues to mount.
Cryptocurrency exchange Binance explained what caused the temporary bitcoin-related withdrawal problems, stating that they were due to repairs being made to fix minor hardware glitches.
Exchange officials said that it was “repairing several minor hardware failures on wallet consolidation nodes earlier today, which caused the earlier transactions that were pending to be broadcast to the network after the nodes were repaired.”
The company said that “these pending consolidation transactions had a low gas fee, which resulted in the later withdrawal transactions – which were pointing to the pending consolidation UTXO – getting stuck and not able to be processed successfully.”
In order to fix these issues, Binance said it had to “change the logic to only take successful UTXO from consolidation transactions or successful withdrawal transactions. This fix will also prevent the same issue from happening again.”
Binance CEO Changpeng Zhao initially said the problem was expected to be fixed in 30 minutes, but Binance said it actually took three hours to address. The company emphasized that users could still withdraw bitcoin on other networks, and that deposits were unaffected.
But amid the general decline of the cryptocurrency, the problems of the exchange did not play in favor of the market.
While many cryptocurrency holders panic and try to get rid of their assets, El Salvador’s Finance Minister Alejandro Zelaya on Monday dismissed fears that the sharp drop in bitcoin values could damage the Central American country’s financial health.
Last September El Salvador became the first country to make bitcoin legal tender alongside the US dollar, despite criticism from the International Monetary Fund and credit agencies.
“When they tell me that the fiscal risk for El Salvador because of Bitcoin is really high, the only thing I can do is smile,” Zelaya said at a press conference. “The fiscal risk is extremely minimal.”
Since last September the Salvadoran government has bought 2,301 units of the cryptocurrency, which fell Monday to its lowest value since 2020.
Zelaya cited an earlier estimate by Deutsche Welle that the country’s bitcoin portfolio lost about $40 million.
“Forty million dollars does not even represent 0.5% of our national general budget,” he said.
The crypto market is going through another round of maturation. So far, cryptocurrencies act mainly as a tool for speculation, but the number of holders of digital tokens is so large that it becomes obvious – not all of them sell and buy cryptocurrency on a daily basis.
Experts from Western countries have been recommending for years to add cryptocurrency to the investment portfolio. With long-term investment, the collapse of crypto will not bring huge losses. In fact, it is events such as the current fall of cryptocurrency that remove from the market those who expect to make too much money from speculation.