Bitcoin plunges to its lowest since late 2020 in a worried market

The bitcoin dive again raises questions about the value of this ever-changing virtual currency.

Bitcoin plunged to its lowest level in 18 months on Monday in a market without risk appetite, also suffering from the suspension of withdrawals on the Celsius investment platform.

While the stock markets are seeing red around the world and investors are rushing to the dollar, a safe haven, “the biggest carnage is probably in the world of Cryptocommented Jeffrey Halley, analyst at Oanda. Bitcoin saw its price drop more than 10% to $24,580 around 8:40 a.m., its lowest since December 2020 and a drop of more than 65% since its all-time high in November 2021.

While the cryptocurrency market was worth more than $3 trillion at its peak seven months ago, it is approaching the $1 trillion mark, according to the Coingecko site, which lists more than 13,000 different cryptocurrencies. In 2021, this still nascent sector had attracted more and more traditional finance players, whose risk appetite was fueled by the ultra-loose policies of central banks around the world.

A drop explained by the rise in Fed rates

But the rate hike by the US Federal Reserve (Fed), which is trying to fight runaway inflation, is weighing on the markets. In addition, the decline of bitcoin accelerated “after the Celsius platform +suspended+ withdrawalscommented Mark Haefele, analyst at UBS. This company valued at 12 billion dollars notably offered its users to place their cryptocurrencies “historical”, such as bitcoin and ether, to invest in new cryptocurrencies.

In October, Celsius notably raised $400 million from the Caisse de depot et placement du Québec (CDPQ), which was pleased to be associated with the “world’s largest cryptocurrency lender“. “Due to extreme market conditions, we are suspending all withdrawals and transfers between accounts“, announced the platform on Monday. “There’s Breakage in the Crypto Space and It’s Likely to Get Worse“Warns Neil Wilson, an analyst at Markets.com. In early May, terra, a cryptocurrency that was supposedly priced against the dollar, crashed, causing investors to worry.

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