Cryptocurrency market is in red. It’s catastrophic fall has shaken investors and experts alike. While some are bullish about the market, the fall of UST and the subsequent LUNA crash has caused several companies to go bankrupt. The panic from the volatility of the market has led to many users cashing out their investments. The Celsius application, which earns interest on held cryptocurrencies, now faces a liquidity crisis. The company would not be able to provide refunds to all of its users in such an event of a massive withdrawal. Bitcoin plunged below $25,000, raising the prospect of a long-term bear market. Non-fungible tokens (NFTs) were also affected by the crash. In the fall of the UST, many platforms specializing in cryptocurrencies lost significant funds.
Celsius blocks withdrawals over liquidity concerns
In a press release, Celsius, which has 1.7 million customers, points out the “extreme market conditions” and assures that it is working to be “in a better position to meet its withdrawal obligations over time.” Celsius claims to be responding to the recent decline in the crypto asset market. Over the weekend, most cryptos lost a significant amount of their value.
Currently, the entire market is in the red, which has triggered a wave of panic among investors. “We are taking these necessary steps for the benefit of our entire community to stabilize liquidity and operations, while taking steps to preserve and protect assets,” Celsius said. Other crypto services may also be affected by similar liquidity problems. Another token that market watchers fear will suffer the same fate as the UST is the lido plotted ETH (stETH). It is a cryptocurrency designed to hold the same value as Ether (ETH). However, it broke away from Ether a few weeks ago.
Celsius and Swissborg have set stETH as cash, respectively. If these two groups close their positions on the token, they will suffer huge losses. In the event of a crash, other industry leaders would also be in trouble. Coinbase, the famed crypto exchange, says the token’s fall poses “significant liquidity, yield, and credit risks” to the world of decentralized finance.