Bitcoin fell to $23,000 on Monday in a wide cryptocurrency crash. This was just seven months after it soared to record heights.
In addition to being the most widely used crypto asset, Celsius Network announced that withdrawals were halted due to volatile conditions.
The loss was accelerated by Binance, a major cryptocurrency exchange that temporarily suspended bitcoin withdrawals and advised customers to use alternative networks.
The world stock market has plunged since Friday, when data showed that US inflation had reached a new four-decade high.
This increased global recession fears, and investors fled risky cryptocurrencies such as bitcoin and ether and instead embraced traditional safe assets like the dollar.
Susannah Streeter, Hargreaves Lansdown analyst, said that ether and bitcoin are still getting severe bruises in the ring.
They are the prime victims of investors’ fear about spiralling consumer prices and flight away from risky assets.
Digital currency fell more than 16% to $22,603 during afternoon London deals. This is a level that was last seen in December 2020.
Bitcoin has fallen 66 percent since hitting a record high of $68,991.85 in November.
Investors sought safety Monday as the US central bank was expected to increase borrowing costs to combat runaway inflation.
After the release of the Celsius Network news, Bitcoin’s slide continued.
“Today, we are announcing Celsius is pausing all withdraws, swap, or transfers between accounts,” the platform stated in a statement.
Celsius made the decision “due to extreme markets conditions”, it said.
In May, the total value of customer deposits fell by more than half to less than $12 billion compared to last year.
According to CoinGecko, the global crypto market now has a value of less than $1.0 trillion.
This is a decrease from the level of over $3 trillion at its peak seven month ago. That was when there was a surge in investor demand and growing acceptance by large financial institutions.
Two countries, El Salvador (and the Central African Republic), have decided to adopt bitcoin as legal tender, despite criticisms from international financial institutions.
The easy money policies of the largest central banks have allowed for a huge infusion of cash to the crypto sector over the past few years.
But, the rise in inflation has led to tighter monetary policies around the world, which have contributed to the industry’s collapse.
Streeter said, “The concern is that inflation is becoming to hot to manage by central banks who’ll be forced to douse economies in jets of freezing water in the form steeper interest rates rises to get it under control.”
“The era of cheap money is rapidly ending, and traders are turning their backs to crypto assets because they fear for their safety.”