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The bitcoin price has crashed 25% over the last month, dragging down other major cryptocurrencies including ethereum, BNB
Now, traders are nervously watching the price of crypto lender Celsius’ cel cryptocurrency which has collapsed by almost 70% over the last month as panicked sellers offload the coin—forcing Celsius chief executive Alex Mashinsky to reassure the market.
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Bitcoin, ethereum and cryptocurrency prices have been hard hit in recent weeks, putting those that … [+]
“All funds are safe,” Mashinsky posted to Twitter in response to rumors that Celsisus, which allows investors to earn interest on their crypto holdings as well as using it as collateral for loans, was in trouble. “Notwithstanding the extreme market volatility, Celsius has not experienced any significant losses and all funds are safe.”
Celsius revealed in its weekly transparency report that recorded outflows of $1.1 billion between May 6 and May 12, described by Mashinsky in his Friday video report as a “tough week” in which Celsius “took quite a beating.” But, “anyone who wanted to withdraw funds was able to do so,” Mashinsky told viewers.
Earlier, Mashinsky defended cel in a YouTube interview with InvestAnswers. “[Cel’’s] not connected [to the business], we don’t protect the cel token, it has its own life,” said Mashinsky. “If too many people show up to sell and not enough people show up to buy, cel will go down in price. In the last drawdown, cel behaved almost like a stablecoin despite the downturn but that just meant there was not enough buyers for sellers.”
Last year, as the bitcoin and wider crypto market went into meltdown following China’s expulsion of crypto miners and traders, the cel price remained stable.
Explaining cel’s “unique mechanism of self-correction,” Mashinsky described how Celsius supports the cryptocurrency by buying more of it every week to meet demand.
“Our flywheel is more users who bring more assets, which means more yield, which means we have to buy more cel. So when we earn that yield on bitcoin, ethereum and so on and those people chose to earn and sell, [Celsius] has to buy more cel tokens.”
This week, blockchain analysis by The Block revealed Celsius had put $500 million into terra’s high-yield Anchor Protocol in recent months, managing to withdraw it ahead of the complete collapse of luna, UST and the terra ecosystem.
Meanwhile, the Financial Times reported Celsius reduced its borrowings of the tether USDT stablecoin ahead of the latest market volatility, reducing it by half to 500 million in recent months, citing an anonymous source.
Tether’s circulating supply has dropped to around $75 billion, down from $83 billion earlier this week according to CoinMarketCap data, suggesting the company’s been hit by around $8 billion in redemptions over the course of the week.
Recent bitcoin and crypto price volatility has been blamed on the Federal Reserve embarking on a tough program of interest rate hikes in an attempt to drive down runaway inflation—with market analysts expecting more pain to come for both stocks and crypto.
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The price of Celsius’ cel coin has crashed by almost 90% since this time last year, falling far … [+]
“The crypto market is a small market,” said Mashinsky, speaking on the InvestAnswers YouTube channel. “It’s basically attached to the hip to the stock market … and the stock market is attached by the hip to the Fed and whatever the Fed does, the stock market will react in a positive or negative way.”
Mashinsky warned that soaring inflation, which has been steering the Fed in recent months, along with the Cboe Volatility Index, or VIX, are the “first dominos,” signaling market fluctuations.
“I have no idea if the [bitcoin] price will go up or down,” Cory Klippsten, the chief executive of bitcoin-buying app Swan Bitcoin, said in a Telegram message.
“Bitcoin feels cheap to me at these levels, but it always feels cheap to me. In general, high volatility is great for exchange volumes, including Swan. We’ve seen elevated purchase levels, three to four times higher than usual, since the Luna
Mashinsky and Celsius did not return a request for comment when contacted.
The Next Luna And UST? Crypto Market Now Braced For Another Earthquake After Bitcoin, Ethereum, BNB, XRP, Solana, Cardano, Avalanche And Polkadot Price Crash – Forbes