🧟♂️ Crypto Market is crashing. What is causing it?
gm degens 💅
Where do I start?!..We just went back to less than $1 trillion in crypto market cap with BTC going down roughly 13% in the last 24 hours @ $24k, the lowest it has been since December 2020.
🧟♂️ Crypto Market is crashing. What is causing it?
There are a couple of factors which might help it:
inflation data all time high for the last 40 years
interest rates to raise again on Wednesday
markets expecting a recession
Inflation data all time high for the last 40 years
While that is not entirely clear, a big factor helping the bearishness is inflation. During the month of May it went as high as 8.6% which is the highest for the last 40 years.
Interest rates to raise again on Wednesday
Another factor playing into this is that FED is expecting to raise fed funds rate by at least 0.5% on Wednesday this week and then another raise next month. This puts a lot of pressure on Powell (Jerome Powell is Fed chair) this week and it is really important to see what he has to say about it. At this point, whatever he says in that meeting will have a huge impact in the crypto space.
Markets expecting a recession
As we have discussed it before, there is a high correlation between stocks market and crypto market. This partially, due to uncertainty of what is expected to happen, especially seeing such high inflation rates and interest rates. Stock market has plummeted with crypto too. Retail investors as well as institutional investors are taking a step back until this passes.
NASDAQ (The composition of the NASDAQ Composite is heavily weighted towards companies in the information technology sector), it is down to $11k, or roughly 30% down year to date. Same thing with S&P 500, down 20% year to date.
😵 Crypto lending platform Celsius passuses withdrawals and transfers
Just went we thought things can not get any worse. For those of you who are not familiar with this platform, Celsius is a crypto lending platform. It is one of the largest crypto lending companies in the world with well over $20 billion in assets.
On Sunday, they came out with an announcement saying that they will be pausing all withdrawals, swaps and transfers between accounts. They claim that this decision is done in order to protect assets to meet obligations to their customers.
We understand that this news is difficult, but we believe that our decision to pause withdrawals, Swap, and transfers between accounts is the most responsible action we can take to protect our community. We are working with a singular focus: to protect and preserve assets to meet our obligations to customers. Our ultimate objective is stabilizing liquidity and restoring withdrawals, Swap, and transfers between accounts as quickly as possible. There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.
There has been an ongoing investigation with a file for Cease and Desist Order from Bureau of Securities against Celsius. Some of the regulators findings against Celsius were:
Celsius has been funding its lending operations and proprietary trading through the sale of unregistered securities in the form of cryptocurrency interest-earning accounts.
Celsius solicits investors to invest in the Earn Rewards accounts by depositing certain eligible cryptocurrencies into the investors’ accounts at Celsius, which in exchange promises investors an attractive interest rate paid weekly in the same cryptocurrency they invested.
The Celsius Earn Rewards accounts are not registered with the Bureau or any other securities regulatory. They are NOT protected by SIPC, nor FDIC or NCUA.
CEL is their official token. They have been using this token to reward some of the users who locked other cryptocurrencies for a specific period. This made a lot of people mad, simply for the reason because CEL has plummeted in the last couple of months. Just today, after the announcement, it went down by 35% to$0.28 from $4.4 back in January this year.
