After weeks of uncertainty about the long-term viability of the DeFi lending platform’s outsized returns, the Celsius network banned withdrawals, swaps, and transfers, causing a global cryptocurrency sell-off.
Bitcoin has dropped 15% to its lowest level since December 2020, and other major cryptocurrencies such as Ethereum have also suffered significant losses.
Celsius competitors Aave, Curve DAO token, and Lido DAO all fell 21.3 percent, 25.20 percent, and 32 percent on Monday, as tokens connected to lending and borrowing protocols underperformed.
According to journalist Colin Wu, a suspected Celsius address used the Maker protocol to borrow 278 million DAI by staking 17,919.37 Wrapped Bitcoin (WBTC) worth roughly $444 million.
According to reports, this is the protocol’s greatest personal debt position. According to Wu, if BTC falls below $22,584, the stake may be liquidated. Wrapped Bitcoin (WBTC) is an Ethereum-based token that reflects Bitcoin and has the same price as Bitcoin.
Cryptocurrency Market Slumps
The week has begun with a dramatic drop in the cryptocurrency market, with all of the top ten coins trading in the red. On Monday, the bitcoin price was hovering around $24,000, producing a lot of tension in the crypto market.
The freefall in Bitcoin’s price has affected the majority of coins. Bitcoin (BTC) has almost reached the $21,864 support level on the daily chart. The fall has come to a halt at $23,000, indicating that there is a prospect of a price rebound.
The largest cryptocurrency by market cap has lost nearly 50% in 2022, and ethereum has lost about 67 percent this year, including a 17 percent dip on Monday. This year, crypto prices have mostly followed the path of stocks, which have been battered by fears of increased interest rates as the Federal Reserve responds to decades of high inflation.