Bitcoin has fallen in price against the dollar by more than 15 per cent to below $25,000, its lowest level since December 2020.
The world’s biggest cryptocurrency was punished by a sell-off in risk assets after Friday’s surprise US 8.6 per cent inflation jump, to a 40-year high, further heightened expectations of more aggressive tightening by the Federal Reserve and other global central banks.
The weekend’s decline was extended today after Celsius Network, a significant player in crypto lending, announced that it would pause withdrawals and transfers between accounts due to “extreme market conditions”.
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The lender, which raised $750 million in funding late last year, offers interest-bearing products to customers who deposit their cryptocurrencies and lends out cryptocurrencies to earn a return. As of May 17, the company had processed $8.2 billion worth of loans and had $11.8 billion in assets, according to its website.
Rival cryptocurrencies also declined, with Ether, the second largest digital currency, off by as much as 12 per cent to its lowest level since February 2021. Solana and Dogecoin both dropped by as much as 14 per cent.
Confidence in crypto, which has until recently been talked up as a possible hedge against inflation, was knocked by the collapse last month of TerraUSD, which broke its dollar peg and collapsed in value.
Bitcoin’s value more than tripled from $20,000 to a record of $68,000 between December 2020 and March, fuelled by the pandemic’s boom in day trading among retail investors armed with US stimulus cheques and lockdown savings.
Bitcoin has now lost 61 per cent while Ether has fallen by 72 per cent since their November highs, causing financial pain for millions of holders who climbed aboard the crypto bandwagon during the pandemic.