Several cryptocurrency platforms may be out of money
The world of cryptocurrencies is in the red. Since the fall of the UST, prices have collapsed. Several companies in the ecosystem were about to go bankrupt. This is particularly the case with Celsius, which preferred to suspend shooting.
In early May 2022, an earthquake shook the cryptocurrency market. l’UST Terra’s algorithmic stablecoin, has lost its parity with the dollar† This event caused the collapse of the Luna and all digital currencies on the market. King Bitcoin crashed below $25,000, raising the threat of a long-running bear market. The crash also weighed on the non-fungible token (NFT) sector. Many platforms specializing in cryptocurrencies lost significant funds in the fall of the UST.
Celsius, an application for earning interest on held cryptocurrencies, is facing a liquidity crisis. In the event of a massive pullout, Celsius would not be able to refund all of its users. In addition, an analysis of the blockchain suggests that Celsius is based on a large number of different loans.
Celsius blocks pullbacks to stay afloat
The platform confirmed the fears of market viewers and announced that it would: stop withdrawals and transfers† In a press release, the company, which has 1.7 million customers, points to “extreme market conditions” and ensures that it is doing everything it can to “be in a better position to meet its withdrawal obligations over time”. Celsius claims to be responding to the recent decline in the crypto asset market. Over the weekend, most cryptos lost a significant amount of their value.
The entire market is in the red, which has sparked a wave of panic among investors. “We are taking these necessary steps for the benefit of our entire community to stabilize liquidity and operations, while taking steps to preserve and protect assets,” Celsius said. Other crypto services may also encounter a liquidity crisis comparable. Market watchers fear another token could suffer the same fate as the UST, the lido plotted eth (stETH) It is a cryptocurrency designed to hold the same value as Ether (ETH). However, it broke loose from Ether a few weeks ago.
Several companies have set stETH as cash, such as: Celsius or Swissborg If these two groups close their position on the token, huge losses are to be expected. Other industry flagship companies would also be in trouble in the event of a crash. For Coinbase, the famed crypto exchange, the token’s fall represents “significant liquidity, yield and credit risks” to the world of decentralized finance.
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