Celsius Network Causes A Major Downfall In The Crypto Market
June 14, 2022
For anyone who invests in cryptocurrencies, 2022 will be unlike any previous year. It is now far more complex than before the news of the Cryptocurrency collapse on the Celsius network. CEL stated that they would halt any withdrawals and transactions from customer accounts.
The news about Celcius has contributed to rising concerns in the market. As a consequence of this realization, it no longer believes crypto. As a direct consequence, the value of one bitcoin dropped below $24,000. There have been reports that indicate a decline of more than 13 percent.
What is Celsius Network?
Celcius provide traditional banking services. People thought it was one of the most compelling aspects of the decentralized finance (Defi) movement. But that was the case up until the last week.
As of the 17th of May, the firm claimed that it had 1.7 million customers. In addition, it had a total of $11.7 billion in assets under management (AUM). In addition, this group has extended loans totaling approximately $8 billion. Additionally, it has offered very high APYs on bitcoin deposits, reaching up to 18 percent in some instances.However, the firm does not have a great deal of official proof or regulatory filings to substantiate the claims it makes about its user base or AUM. Users were informed in a message the corporation had placed on its website that their assets had been held.
Statement By The Celsius Network On The Cryptocurrency Crash
Users were informed that withdrawals, Swaps, and transfers of any type would not be permitted under any circumstances. Because of this, users were unable to do any activity. Because their goal was to maintain their operations and liquidity while maintaining and protecting their assets, this will benefit the whole community.
As a result of the pressure from the authorities, the company decided to discontinue offering interest-bearing accounts to investors who are not certified. Complaints have been lodged against the corporation by the states of Alabama, New Jersey, and Texas because it offers unregistered securities to its customers.
CEL, the company’s native digital token, was sold to bring in a total of $50 million in the capital in 2018. The price of CELs dropped by 46% during the previous day and decreased by 97% overall.
What caused the cryptocurrency to crash?
The Celsius network has banned withdrawals for all users, which led to the system’s collapse. As a direct consequence, it took a significant knock this week, as the total market value dropped below $1 trillion.
As a direct consequence, an enormous sum of money—billions of dollars’ worth—is stuck inside the network. The financial institution offers a return on bitcoin deposits. In this instance, it placed its consumers’ values into various decentralized financial measurements.
As a result, if the organization were to cease its activities, it would likely harm various cryptocurrencies, financial initiatives, and internet assets.
On the other hand, other investors believe that the whole market might be negatively affected if the corporation does not reopen the deposits.
However, as of right now, we do not know why the organization is struggling with its liquidity. However, it might be the corporation’s investments in the Lido Staked Ethereum. Users are granted the ability to lock Ethereum inside a smart contract in exchange for yield. Because of its pricing fluctuations, Celsius may be having trouble meeting its liquidity needs.
The most recent estimate puts this company’s Ethereum holdings at about $1.5 billion. Marcus Sotiriou was the one who provided the additional information. His role at GlobalBlock was that of an analyst. However, the firm assured customers there was nothing to worry about, and the reason for this was that investors would continue to earn interest on their deposits even if they could not withdraw their money.
Effects Of The Cryptocurrency Meltdown On The Celsius Network
Bitcoin is a significant cryptocurrency on a global scale. However, it decreased by roughly 8 percent, which resulted in it falling below $23,000. In addition, the firm’s worth has dropped by almost 25 percent over the last several days.
Effects On Ether
Ether is a kind of digital currency that comes at number two on the list of most valuable cryptocurrencies. It has decreased by 4 percent, equivalent to a loss of around 32 percent. Since November, its value has dropped by about three quarters since then.
Effects On Binance
Binance is now the largest cryptocurrency exchange in the world. On Monday, it did the same thing on its bitcoin network, which was to suspend users’ withdrawals for several hours. Binance acknowledged that it had some problems with transactions becoming stuck, which led to a backlog. Their crew has been working on this assignment for a considerable time. Their goal is to maximize the number of transactions that can still take place on the BTC network. It precludes the occurrence of events of a similar kind in the future.
Why Celsius Network Is Important For Crypto Community?
Throughout this year, the market has been dealing with significant volatility, and vigorous interest rate rises from the Federal Reserve. As a consequence, the prices continue to be subject to constant pressure, and investors report experiencing continuous selling pressure in the market.
After the UST lost its $1 peg, the market saw a negative impact in May, while Luna experienced a complete collapse. You must be aware that Luna is connected to the stable coin TerraUSD (UST).
The failure of Luna and TerraUSD has resulted in the loss of sixty billion dollars worth of money. In addition, it affects people’s trust in the market as a whole.
The cryptocurrency meltdown known as Celsius was reportedly the cause of the failure of the Luna network, as stated by a few cryptocurrency specialists. However, the business does not concur with this assessment.
On Twitter, a rival called Nexo, located in London announced that it could be interested in purchasing the company’s remaining assets. As a result, Nexo referred to it as a collateralized loan portfolio and produced a letter of intent that described it in detail. After that, a Nexo spokesperson checks over the tweets to ensure they are accurate.
According to the available data, this corporation’s total assets are around $3.7 billion. Celsius uses it to pay interest on deposits made to the Cryptocurrency crash Celsius network and then lend those funds to other parties so that it may earn a profit. Jeffrey Halley, a senior market analyst at Oanda who specializes in the Asia Pacific region, said the withdrawal stoppage led to more downward momentum. He went on to say that the next significant mark for bitcoin may reach $20,000.