Crash in cryptocurrency market after lender ‘pauses’ withdrawals

Bitcoin (BTC) has fallen by almost 20% as part of a crash in the cryptocurrency market after a popular lender froze withdrawals and transfers.

BTC fell 17.96% to 23,054.90 dollars over the space of 24 hours, and it has lost 26.29% of its value in seven days, according to CoinMarketCap.

This trend can be seen across the cryptocurrency market, with the value of Ethereum (EHM) dropping by 20.52% in 24 hours to 1,215.44 dollars, and Tether (USDT) crashing by 0.03% to just under a dollar (0.9986).

The market reaction came after major crypto lender Celsius Network posted on its website: “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.

“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.”

Celsius’s announcement prompted crypto lending platform Nexo to offer to acquire its assets.

“After what appears to be the insolvency of @CelsiusNetwork and mindful of the repercussions for their retain investors & the crypto community, Nexo has extended a formal offer to acquire qualifying assets of @Celsius Network after their withdrawal freeze,” the group tweeted.

Digital lender Binance also announced it has “temporarily paused Bitcoin withdrawals” following the crash.

Michael Kamerman, CEO of trading platform Skilling, told the PA news agency: “Cryptocurrencies continue to gain momentum and legitimacy in the trading world, with one in five NatWest customers having invested in cryptocurrency – a higher proportion than are invested in regular stocks and shares.

“With the Federal Reserve ready to further tighten the screw on interest rates this week, this sharp fall is arguably only a reflection of the current bear market, meaning traders will need to be even more cautious on what they decide to put their money into.

“It’s not a great look for the market when crypto firms like Celsius pause transfers during such crucial times, especially as the crypto press has already in recent times not been the most positive.

“While this may be a harbinger of things to come, and despite sentiment cooling towards particularly high-risk projects following the collapse of the Luna and Terra tokens, crypto is still the word on everyone’s lips, including traders, major players in financial services, governments and policymakers.”