Bitcoin tumbled on Wednesday to a new 18-month low, dragging smaller tokens down with it and deepening a market meltdown sparked by crypto lender Celsius this week freezing customer withdrawals.
The world's largest cryptocurrency fell as much as 7.8% to $20,289, its lowest since December 2020. It has lost around 28% since Friday and more than half of its value this year. It has slumped about 70% from its record high of $69,000 in November.
The digital currency sector has been pummelled this week after U.S. crypto lender Celsius froze withdrawals and transfers between accounts, stoking fears of contagion in markets already shaken by the demise of the terraUSD and luna tokens last month.
Expectations of sharper U.S. Federal Reserve interest rate hikes as inflation in the world's biggest economy soars have also heaped pressure on risky assets from cryptocurrencies to stocks.
Crypto funds saw outflows of $102 million last week, according to digital asset manager CoinShares, citing investors' anticipation of tighter central bank policy.
The value of the global crypto market has tumbled 70% to under $900 billion from a peak of $2.97 trillion in November, CoinMarketCap data shows.
"The ripples running through the market haven't stopped yet," said Scottie Siu, investment director at Hong Kong-based Axion Global Asset Management. "I think we’re still in the middle of it unfortunately, the game isn’t over."
Celsius has hired restructuring lawyers and is looking for possible financing options from investors, the Wall Street Journal reported, citing people familiar with the matter. Celsius is also exploring strategic alternatives including a financial restructuring, it said.
Smaller cryptocurrencies, which tend to move in tandem with bitcoin, also fell. Ether, the second largest token, fell as much as 12% to $1,045, a new 15-month low.
The chaos in the crypto market has spread to other companies, with a number of exchanges slashing workforces.
Major U.S. exchange Coinbase Global Inc said on Tuesday it will cut about 1,100 jobs, or 18% of its workforce. Gemini, another U.S. exchange, said this month it would cut 10% of its workforce.
Still, others are continuing to hire. Binance, the world's largest exchange, said on Wednesday it was hiring for 2,000 positions, and U.S. exchange Kraken said it had 500 roles to fill.
"Hunker down," tweeted Binance CEO Changpeng Zhao.