The cryptocurrency market melted down again on Monday, as the price of Bitcoin plummeted to its lowest point since 2020, wiping away years of investments.
Bitcoin is down 18 percent over the last 24 hours, falling to about $23,000, its lowest value since December 2020, according to CoinMarketCap, an industry price tracker. Ether, the second-most valuable cryptocurrency, is down more than 20 percent.
The crash extends a dire period for cryptocurrencies, illustrating in graphic terms the risks of these experimental investments. Just a month ago, the implosion of a popular coin helped trigger a crypto meltdown that erased $300 billion in value across the market.
Crypto prices started dropping again late last week, when a report showed a surge in inflation in the United States, which rattled markets. Investors worried that it could prompt the Federal Reserve to raise interest rates higher and faster, a move that could hit the U.S. economy.
The price tumble was accelerated over the weekend by an announcement from Celsius, an experimental crypto bank, that it was halting withdrawals “due to extreme market conditions.” At one point this year, Celsius held nearly $20 billion in assets, attracting depositors with a promise of yields as high as 18 percent if they entrusted their cryptocurrency to the project.
Celsius is one of a number of start-ups in the murky world of decentralized finance that are coming under intense scrutiny as crypto prices drop.
The crash in May was accelerated by the collapse of TerraUSD, a so-called stablecoin with a fixed price pegged to the U.S. dollar. The coin’s $1 peg was underpinned by complex financial engineering that linked it to a sister cryptocurrency called Luna. When the price of Luna plummeted in May, TerraUSD fell in tandem — a “death spiral” that destabilized the broader market.
A similar process played out on Sunday, when Celsius announced that it was halting withdrawals. On a Reddit page for Celsius customers, panicked investors wondered whether they would ever be able to get their deposits back. The news rippled across crypto markets, causing the prices of Bitcoin and Ether to plunge.