- Bitcoin has hit $25,000 after Celsius halted withdrawals last night
- Rumours over Celcius’ financial position had been doing the rounds for a couple of weeks
- Celsius will not be the last DeFi lender to go under in the next few months
Bitcoin bypassed the temporary bottom established by the Terra crash last night, hitting $25,000 as lending giant Celsius halted withdrawals amid rumours of insolvency. Concerns over Celsius’ position have been doing the rounds ever since the Terra incident, and last night these concerns became reality, with the lending platform halting withdrawals, swaps, and transfers between accounts citing “extreme market conditions”. The CEL token crashed from $0.36 to $0.14 within one hour as a result, while the narrative also impacted Bitcoin.
Celsius Presses Pause and Dumps Market
Bitcoin was already living a dangerous life with its fall through $29,000 support, but as the weekly close approached, a weekly close that would all but confirm a bear market, it decided to leave everyone in no doubt, touching $25,000 on most exchanges before an unconvincing bounce.
The catalyst behind the sudden drop, apart from general utter bearishness in all markets, is the decision by Celsius to halt withdrawals, swaps, and transfers following weeks of rumours about the company’s financial position. The company, which has tens of billions of assets under management, has been facing heavy withdrawals due to the crypto downturn, leading to Twitter user yieldchad (@yieldchad) pointing out a week ago that their remaining ETH holdings consisted of only 27% liquid ETH, with the rest in other forms that are locked down for at least a year:
This is fine https://t.co/ZDuNHmUOpt pic.twitter.com/cHoSZ7BrKR
— //Bitcoin 𝕵ack 🐐 (@BTC_JackSparrow) June 5, 2022
As the suggestion that Celsius was running out of funds to honour withdrawals, more and more people picked up on the story, with some even receiving death threats for spreading “Celsius FUD”. However, last night the truth was revealed:
.@CelsiusNetwork is pausing all withdrawals, Swap, and transfers between accounts. Acting in the interest of our community is our top priority. Our operations continue and we will continue to share information with the community. More here: https://t.co/CvjORUICs2
— Celsius (@CelsiusNetwork) June 13, 2022
The reality soon set in for those who hadn’t got out in time:
The news hit the CEL token hard, which continued its anaemic performance from the 2021 top:
Mashinsky Under Fire for Bullish Posts
The development also looked very bad on founder Alex Mashinsky, who had been commented positively and retweeting FUD-fighting posts from others right up to 24 hours before the announcement, when he surely must have known what was coming:
Mike do you know even one person who has a problem withdrawing from Celsius?,
why spread FUD and misinformation.
If you are paid for this then let everyone know you are picking sides otherwise our job is to fight Tradfi together…
— Alex Mashinsky (@Mashinsky) June 11, 2022
Twitter wasn’t slow to recognise the irony, with some offering a stark warning:
Careful what you say Mashinsky, you know the SEC is gonna be reading all of this one way or another
— Leigh Drogen (@LDrogen) June 11, 2022
If things look bad for Mashinksy they look worse for Celsius as a going concern, with money needed from somewhere to honour withdrawals, which are going to be almost total if it ever opens them back up again.
With such a big player as Celsius seemingly about to go to the great crypto graveyard, questions over other DeFi platforms will naturally be raised. It’s likely therefore that this isn’t the last DeFi lender that goes down in this newly crowned bear market.
