Crypto crash - latest: Bitcoin withdrawals still blocked by Binance after huge market collapse

Adam Smith
·13 min read

Bitcoin has crashed below $24,000, reaching its lowest levels since the end of 2020.

More than $200 billion has been wiped off the entire cryptocurrency market on Monday morning.

It is the latest in a series of price crashes for the cryptocurrency, which has seen it drop more than 60 per cent in value over the last seven months.

Several leading cryptocurrencies, including Ethereum (ETH), Cardano (ADA), Solana (SOL) and Dogecoin (DOGE) experienced even heavier losses than bitcoin, falling by between 15-25 per cent over the past day.

While many crypto holders are liquidating their assets, crypto lender Celsius told customers that they would be temporarily unable to withdraw funds from the platform.

“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts,” the company said today.

Key points

How bad is the latest bitcoin crash?

20:36 , Anthony Cuthbertson

Crypto market analysts are divided over whether we’re nearing the end of the bear market, or still firmly in the middle of it.

With more than 60 per cent losses for bitcoin since its November 2021 price peak, some believe it could still rival the 80 per cent+ losses seen during the market corrections of 2013 and 2017.

After dropping below $1 trillion today for the first time since 2020, we’ve asked analysts which way they think the crypto market is heading from here.

You can read all about it here:

How bad is the latest bitcoin crash?

Bitcoin’s crash continues

17:40 , Adam Smith

Crypto’s crash continues - the Celsius cryptocurrency has lost nearly 80 per cent of its value, as The Independent’s Anthony Cuthbertson documents.

Elsewhere, Bitcoin has crashed more than 10 per cent at the start of the week, falling below $25,000 for the first time since December 2020.

We will be continuing our updates tomorrow - stay tuned!

The FCA is coming for crypto

17:30 , Adam Smith

Bitcoin’s volitlity at this time is unlikely to sweeten it to the Financial Conduct Authority in the UK, which is looking to regulate crypto more.

Nikhil Rathi, head of the organisation, said that crypto is “a vector for serious organized crime and money laundering” and told a Treasury Committee that “anyone who invests in them must be ready to lose all their money.”

In the past two years, Bloomberg notes, the FCA has all-but-banned Binance in the UK and set high standards for doing busines sin the country so that most digital currency companies can’t operate.

“In the US we have an alphabet soup of regulators,” Eugene Soltes, a Harvard Business School professor who studies regulation, says. “We’re trying to figure out still who is the regulator, not how we should regulate them. The FCA already has one up.”

Severe losses moving forward, expert predicts

17:20 , Adam Smith

“We could be facing even more severe losses moving forward. Economic growth is clearly slowing, and reports already suggest the U.S. could see a recession in the next year,” said Manuel Ortiz-Olave, co-founder at equity tokens firm Brickken, in an email to CoinDesk.

“Higher inflation will continue forcing higher interest rates, and higher interest rates are also negative for economic growth.”

He continued: "Some of the most important companies in the world like Apple, Microsoft or Nike have already reported slowdowns in sales, and Tesla has indicated that layoffs will come soon. These are clearly negative headlines, which combined with higher food and fuel prices, make people be careful about their savings.”

‘Bitcoin and ether are continuing to get a severe bruising in the ring'

16:55 , Adam Smith

Susannah Streeter, investment and markets analyst at Hargreaves Lansdown, told This Is Money: “As inflation proves to be an even trickier opponent to beat than expected, bitcoin and ether are continuing to get a severe bruising in the ring.

“They are prime victims of the flight away from risky assets as investors fret about spiraling consumer prices around the world.

“The worry is that inflation is becoming too hot to handle by central banks who will be forced to douse economies with jets of freezing water, in the form of much steeper interest rate rises, to get it under control.

“With the era of cheap money coming rapidly to an end, traders are becoming much more risk averse and turning their backs on crypto assets.”

Binance still blocking withdrawals

16:43 , Adam Smith

Binance said that it would allow users to withdraw their bitcoin - admidst the market crash - three hours ago after a “stuck transaction causing a backlog”.

However, that has not happened. “This is only impacting the Bitcoin network. You can still withdraw Bitcoin on other networks like BEP-20”, Binance chief executive Changpeng Zhao tweeted.

“Likely this is going to take a bit longer to fix than my initial estimate. More updates soon. Thanks for your patience and understanding.”

Rising inflation is weighing on stocks

16:30 , Adam Smith

"Bitcoin prices suffered after US CPI rose to a four-decade high. With fundamentals currently driving price action, the economic calendar remains key for digital assets. Throughout the week, the release of high-impact economic data has exacerbated fears of rising inflation, weighing on stocks and cryptos alike. With Bitcoin prices currently trading within a well-defined range, the key psychological level of $30,000 continues to provide a firm level of support and resistance for price action, holding both bulls and bears at bay”, Tammy Da Costa, analyst at DailyFX, a portal for financial market news.

“As the war in Ukraine rages on, rising food and energy costs continue to support higher prices, placing additional pressure on policymakers to implement more aggressive monetary tightening measures in an effort to drive inflation lower. With investors pricing in a negative growth outlook and a higher probability for the Federal Reserve to increase rates more aggressively than initially anticipated, Bitcoin bears were able to gain traction before finding support at around the $29,000 mark”, says Ms Da Costa.

“At the time of writing, Bitcoin has fallen by 37 per cent (YTD) as the speculative asset remains vulnerable to the geopolitical backdrop. Although fundamentals remain the prominent driver for price action, major technical levels may act as an additional catalyst for both the immediate and longer-term move.”

‘An unconfortable moment'

16:20 , Adam Smith

"It's still an uncomfortable moment, and there's some contagion risk around crypto more broadly," said Joseph Edwards, head of financial strategy at fund management firm Solrise Finance, as per Reuters.

16:15 , Adam Smith

In April this year, UK chancellor Rishi Sunak tweeted that he was “working to make the UK a global cryptoassets hub” with the “businesses of tomorrow, and the jobs they create, here in the UK.”

Since that tweet, commentators have pointed out, Bitcoin has dropped 50 per cent.

15:55 , Adam Smith

Mr Saylor himself has tweeted: In #Bitcoin We Trust.

15:45 , Adam Smith

However, MicroStrategy does still hold “quite a bit” of uncollateralized Bitcoin that could assist it.

“As you can see, we mentioned previously we have quite a bit of uncollateralized Bitcoin,” Le said.

“So we have more that we could contribute in the case that we have a lot of downward volatility. But again, we're talking about $21,000 before we get to a point where there needs to be more margin or more collateral contributors. So I think we're in a pretty comfortable place where we are right now.”

15:30 , Adam Smith

MicroStrategy’s chief financial officer Phong Le said in company’s first-quarter earnings call on Tuesday that if Bitcoin’s price falls below $21,000 the company will have to pay more cryptocurrency to maintain its $205 million Bitcoin-collateralized loan with Silvergate Bank - which was used to buy Bitcoin in the first place.

“We took out the loan at a 25% LTV; the margin call occurs at 50 per cent LTV,” Le said. “So essentially, Bitcoin needs to cut in half, or around $21,000, before we’d have a margin call.”

MicroStrategy might have to sell its holdings

15:00 , Adam Smith

Business intelligence firm MicroStrategy have to sell a large amount of cryptocurrency should bitcoin drop further.

Chief executive Michael Saylor had the company stockpiling the cryptocurrency in August 2020.

MicroStrategy added another $215 million worth of Bitcoin at an average purchase price of $44,645 per coin in the first quarter.

Its total holding is 129,218 Bitcoins acquired for $3.97 billion, or $30,700 per coin, Fortune reports.

Celsius collapse: Crypto plunges after withdrawals suspended

14:36 , Adam Smith

The Celsius cryptocurrency has now lost nearly 80 per cent of its value amid a major collapse that has wiped more than $400 billion from the crypto market.

The CEL token is affiliated with the lending platform Celsius Network, which suspended customer withdrawals on Sunday evening citing “extreme market conditions”.

Nexo co-founder Antoni Trenchev said on Monday that it had been in contact with Celsius “to discuss the acquisition of its collateralised loan portfolio”.

The Independent has reached out to Celsius for comment.

14:30 , Adam Smith

Celsius stopping customers withdrawing their funds comes as a major u-turn after spending days rebutting accusations that users could not take out their funds.

Chief executive Alex Mashinsky challenged critics at the weekend to find “even one person who has a problem withdrawing”, the Financial Times reported.

The group’s own coin, CEL, has lost half its value in the past 24 hours.

14:00 , Adam Smith

President Bukele posted pictures of a scale model of the crypto-fuelled city, which will be constructed near the Conchagua volcano on the Gulf of Fonseca in the south-east of the Central American country.

There will be no property, income or municipal taxes, nor will it produce any carbon dioxide emissions, should it be successful.

Geothermal energy from the volcano will be used to power the city, as well as to mine bitcoin.

13:40 , Adam Smith

The market crash could have significant effects for people - and countries - heavily invested in crypto.

In May El Salvador, whose president has said he is building a ‘crypto utopia’, bought the dip after the last crypto crash. The country purchased 500 coins at an average USD price of approxmiately $30,744.

Now, however, those coins will be worth less. “Bitcoin now down almost a quarter since El Salvador's president "bought the dip" last month”, tweeted Financial Times columnist Jemima Kelly.

“That's over $3 million down the drain just in that last round of buying, in a country where 1 in 4 live below the poverty line”.

13:20 , Adam Smith

Bitcoin could be on the verge of a breakdown and a ‘crypto winter’ might be approaching, one expert has suggested.

"Crypto hobbles into the week somewhat beholden to the whims of the stock markets, clearly on pins and needles over May inflation numbers – the U.S. Consumer Price Index (CPI) report dropped on Friday; its bottom line, not what anybody wanted to hear. Economists expected the CPI to rise 8.3% year over year, but the headline inflation level actually came in at 8.6%. Wall Street was groping for a sign that inflation may have peaked. So is the Federal Reserve”, Rich Blake, a financial consultant at Uphold, told The Independent.

“Minutes before Friday’s CPI report, Bitcoin was battling to stay above $30K. Hours earlier, it was under $29,000 and appeared to be on the verge of a breakdown. A looming hazard of a ‘crypto winter’, now hangs in the balance.”

Crypto exchange Binance blocks bitcoin withdrawals amid market collapse

13:11 , Adam Smith

Crypto exchange Binance has blocked bitcoin withdrawals amid a major market downturn, in breaking news as the crypto market crashes.

A stuck transaction meant there was a backlog in the company’s systems and it was unable to fulfil people’s requests, the company said.

Changpeng Zhao, the Binance chief executive who goes by the name CZ, said on Twitter that people’s funds were safe.

13:00 , Adam Smith

It has been suggested that this price plunge reveals that investors are not as keen on crypto’s risk as much as they were. Cryptocurrency is one of the most volitile assets.

“The crypto market has been under pressure from the Federal Reserve, hiking the interest rates to combat inflation over the past few months. Bitcoin, Ethereum, and most cryptocurrencies suffered losses over the weekend after a broad sell-off following the data showing US inflation hitting a 40-year high,” said Edul Patel Co-Founder and CEO of crypto investment platform Mudrex, told Financial Express.

“As investors seem to have panicked, the number of crypto liquidations has been high since Friday. Bitcoin and Ethereum plummeted as much as 7 per cent each and are currently trading at their lowest at US$25,000 and US$1,300. The bearish trend may likely continue in the next coming days”

12:40 , Adam Smith

Bitcoin has declined for nearly twelve straight weeks - one of the asset’s biggest slides in its lifetime.

12:20 , Adam Smith

The collapse of Terraform Labs’ Luna and UST token last month wiped more than $40 billion from investors’ holdings.

12:00 , Adam Smith

Amid the liquidations, crypto lender Celsius told customers that they would be temporarily unable to withdraw funds from the platform. This has been seen before, with Binance stopping owners withdrawing when the TerraLuna cryptocurrency crashed.

11:55 , Adam Smith

“Now the clearest signal yet that cryptoassets such as bitcoin and ether are moving in lockstep with equities has flashed, as inflation worries have sent stocks and crypto tumbling. The reasons for this are varied, but much of it comes down to institutional holders, which calibrate their risk assets in similar ways, be they tech stocks or bitcoin.”

11:50 , Adam Smith

The market crash also coincided with a similar capitulation of tech stocks in recent days, leading analysts to speculate that the two are reacting in tandem to external market forces.

“[Cryptocurrencies] have in the past not moved in step with traditional assets such as equities, however in recent times the link between the two has grown ever closer,” Simon Peters, an analyst at the online trading platform eToro, wrote in a note on Monday.

11:40 , Adam Smith

There are a number of factors that have influenced this sell-off. In the United States and the United Kingdom, inflation is rising heavily and interest rates are likely to be increased to match.

11:22 , Adam Smith

The cryptocurrency market cap fell under $1 trillion on Monday for the first time since February 2021, according to CoinMarketCap data.

Coins crash as the market falls

11:12 , Adam Smith

Welcome to The Independent’s live tracking of the market crash. We start with one sobering fact: Not a single cryptocurrency in CoinMarketCap’s top 100 rankings saw any gains over the last day.