crypto markets fell more than 11 percent early Monday amid a bloodbath in financial markets as late-breaking inflation readings in the US sparked fears of an aggressive Fed rate-hiking strategy to fight inflation. Lending platform Celsius Networks, which also paused withdrawals, sent shockwaves through the crypto world, pulling the market cap below the psychological $1 trillion mark for the first time since January 2021.
Data released on Friday showed the CPI rose 8.6 percent, the largest increase in the 12 months to December 1981. Markets were expecting inflation to remain stable at 8.3 percent. Core CPI rose 6 percent, cooling from April’s 6.2 percent but better than the market’s expectation of 5.9 percent. The 34.6 percent rise in the energy index was the largest 12-month rise since late September 2005. For the first time since late March 1981, the food index rose more than 10 percent.
Asian stock exchanges closed with deep losses. European markets are trading significantly lower. Wall Street futures are also pointing to big losses on the open. The dollar index edged closer to the 52-week high of 105 bit by bit. Bond yields have firmed across all maturities and commodities have tumbled. Gold is down more than 2 percent overnight.
The liquidity crisis at lending platform Celsius Networks shook crypto markets on Monday after it announced it would halt all withdrawals, exchanges and transfers between accounts, citing extreme market conditions. The native Celsius (CEL) token, which ranks 345th overall and 5th in the lending and borrowing category, fell more than 45 percent overnight. The market cap fell to $50 million from $87 million on Sunday.
Meanwhile, another cryptocurrency lending platform, Nexo, has come forward to acquire qualifying assets from Celsius after the payout halt.
In a related development, USDT stablecoin issuer Tether clarified that while its investment portfolio included an investment in Celsius, which represented a minimal portion of its equity, there was no correlation between the investment and its own reserves or stability. Tether also clarified that its lending activity with Celsius has always been over-collateralized and has no impact on its reserves.
The total crypto market cap currently stands at $971 billion.
Bitcoin’s dominance stood at 46.6 percent, while Ethereum’s share slipped to 15.3 percent. The dominance of stablecoins rose to 16.4 percent, giving remaining altcoins a market share of just under 21.7 percent. The number of stablecoins among the top 100 cryptos has also increased to 10.
Tether (USDT) at number 3 has traded between $0.9979 and $0.9991 over the last 24 hours, while USDCoin (USDC) at number 4 has traded between $0.9995 and $1.00 over the same period. BinanceUSD (BUSD) at number 6 has traded between $0.9985 and $1.00 for the last 24 hours.
TRON DAO’s 56th-ranked algorithmic stablecoin USDD temporarily lost its peg to the US dollar, trading between $0.9757 and $1 over the past 24 hours, versus the previous day’s $0.9966 to $1 range.
Bitcoin is trading at $23,620.23 after falling to an 18-month low of $23,458.60. The leading cryptocurrency is down 13.7 percent over the past 24 hours and 24.5 percent over the past 7 days. Only 46 percent of BTC holders are in the money at current prices.
Ether also fell to an 18-month low of $1,209.92 earlier in the day. The leading altcoin is down 15.4 percent in the past 24 hours and 35 percent in the past 7 days to trade at $1,235.06. Only 36 percent of ETH holders are in the money at current rates.
Ether’s losses exceeded Bitcoin’s amid the de-pegging of Lido Staked Ethereum (stETH) at No. 204, a DeFi variant of Ethereum with staking. stETH is trading at $1,149.84 versus the Ethereum price of $1,235.06. Although the Ethereum staked would be released after the Ethereum to Proof of Stake transition, concerns about The Merge and the big dump by certain investors reportedly increased selling pressure and broadened depegging.
Despite the successful merger on the Ropsten testnet, the developers’ decision to postpone testing of the Difficulty Bomb, a code designed to eliminate on-chain mining, also added to negative sentiment on Ethereum.
52nd place Aave (AAVE), 63rd place THORChain (RUNE), 87th place Curve DAO Token (CRV) and 89th place STEPN (GMT) are down more than 20 percent overnight.
Total Value Locked (TVL), the total value of crypto assets locked in DeFi protocols (including staking, lending and liquidity pools) fell to $91 billion, down 14 percent on a daily basis.
The TVL of top-tier Maker DAO (MKR) fell 6 percent overnight and 18 percent weekly to $8 billion. The TVL of the second-place curve (CRV) is down 11 percent over the past 24 hours and 28 percent over the past 7 days to $6.9 billion. AAVE and Lido also suffered more than 35 percent weekly declines.
The carnage in the crypto market has also impacted the prices of stocks exposed to cryptocurrencies. The turmoil could continue as markets prepare for the outcome of the Fed’s two-day meeting, which begins on June 14th. Concerns remain as to whether the Fed will hike rates more than expected on a backdrop of stronger-than-expected rising inflation.
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