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The cryptocurrency industry had one of its worst days ever - here's what happened

Alsyd Eabidin
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 Crypto had a brutal first half of 2022, but the few days have been this bad for an industry that has built itself around digital currencies.

The cryptocurrency industry had one of its worst days ever - here's what happened

On Monday, exchanges halted withdrawals, companies cut jobs and panicked investors dumped their holdings, sending the cryptocurrency market cap to less than $1 trillion, down from $3 trillion at its peak in November.


Bitcoin dropped to an 18-month low, dropping below $23,000. The most valuable cryptocurrency is down 15% in the past 24 hours, while Ethereum, which is second only to Bitcoin, is down 17%.


The sell-off comes as investors are moving away from riskier assets due to macroeconomic headwinds and rising interest rates. But it's worse than that. Monday's action demonstrated a fundamental mistrust of cryptocurrencies and the platforms that support them. What was already a deep slowdown is starting to look like a panic selling.


Here are some cryptocurrency highlights for Monday:


read more: How did the cursed currency "Luna" cause millions to lose their money?


Centigrade infection effect


For weeks, concern has been growing that Celsius, one of the most popular cryptocurrency trading and lending platforms, is in the midst of a liquidity crunch. The percentage score offers users up to 18.63% return on their deposit. It's like one of the products a bank might offer, except there are none of the regulatory safeguards.


The Celsius token has fallen from over $7 to about 33 cents in the past year - and has fallen more than 50% in the past week. Celsius is the largest holder of the token.


Meanwhile, the company's $26 billion in cash has more than halved since October.


Celsius previously admitted losing money, although it did not specify the amount, as a result of the $120 million hack of the BadgerDAO decentralized finance platform.


Early Monday, Percentage shocked the market, announcing that all withdrawals, swaps and transfers between accounts had been paused due to “extreme market conditions.” In a note to Celsius Community, the platform also said the move was aimed at "stabilizing liquidity and operations."


"We are taking this action today to put Celsius in a better position to meet its withdrawal obligations over time," the memo said.


Celsius has locked up its $12 billion in crypto assets under management, raising concerns about the solvency of the platform. The news spread across the cryptocurrency industry, reminding some of what happened in May, when a stablecoin project linked to the US dollar lost $60 billion and took the broader cryptocurrency industry down with it.


Shares of crypto exchange Coinbase plunged 11% on Monday to their lowest levels since the company went public in April 2021.


Binance Pauses Bitcoin Withdrawals


Binance also hit the pause button on Monday. The world's largest cryptocurrency exchange has suspended bitcoin withdrawals for more than three hours "due to a halted transaction causing a backlog".


Although CEO Changpeng Zhao said the repair would only take half an hour, he later revised his estimate, saying it would take "a little longer" than initially expected. By 11:30 AM, service was restored.


“A batch of BTC dollar transactions has been halted due to lower transmission fees, leading to a buildup of BTC network withdrawals,” Binance wrote in a tweet.


In a series of post-mortem tweets, the exchange noted that the deposits were "unaffected" and explained that the problem was caused by scheduled repair work.


Zhao assured the customers that all the money was "SAFU". This is a reference to the Safe User Asset Fund, which was set up by Binance in 2018 to protect user assets.


During the withdrawal outage, Zhao tweeted that it is still possible for holders to receive their bitcoins on other networks such as CEP-20.


Layoffs ahead of 'crypto winter'


Peter Thiel-backed startup BlockFi has joined a growing list of crypto companies that are cutting costs by cutting jobs.


On Monday, the company announced that it would cut staff by about 20%. Before the recent cuts, the company had expanded from 150 employees at the end of 2020 to more than 850.


CEO Zach Prince said in a tweet that BlockFi has been affected by a “dramatic shift in macroeconomic conditions,” which has had a “negative impact” on growth.


It has become a familiar topic for companies in the space.


Late last week, Crypto.com announced a staff reduction of 260 people, just seven months after the company acquired the naming rights to the arena that includes the NBA's Los Angeles Lakers in a $700 million deal. Earlier this month, Gemini said it was laying off 10% of its workforce and warned that the industry is in a "recession phase" known as "crypto winter."


Meanwhile, Coinbase has extended the hiring pause "for the foreseeable future" and plans to cancel some job offers.

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