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The current sell-off has been fuelled by the threat of rising interest rates as central banks battle to tame runaway inflation.
It comes as digital asset trading companies slash jobs after the new cryptocurrency crash began on Monday.
Crypto lender Celsius Network stopped customers making withdrawals due to ‘extreme market conditions’.
The company’s own digital currency, known by its CEL ticker, plunged 55 per cent in the wake of the suspension as investors feared it could be on the brink of insolvency.
The meltdown has left millions nursing heavy losses.
Data from the Financial Conduct Authority (FCA) published a year ago estimated around 2.3m UK investors owned cryptocurrency, equivalent to 4.4 per cent of the adult population.
One in seven of those buying crypto during the pandemic borrowed money to do so.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘Red lines on a chart belie the financial pain which this loss of value is set to cause for millions of crypto holders.
‘It’s a stark reminder that dabbling in the crypto Wild West is highly risky and investments in such assets should only be at the edges of a portfolio, with money you can afford to lose.’
Crypto exchange Coinbase also announced that it is sacking over 1,000 employees after previously rescinding job offers.
Crypto funds saw outflows of $102million last week, according to Digital Asset Manager CoinShares, citing investors’ anticipation of tighter central bank policy. The value of the global crypto market has fallen under $900billion, CoinMarketCap data shows, down from a peak of $2.97trillion in November.
‘The ripples running through the market haven’t stopped yet,’ said Scottie Siu, investment director at Hong Kong-based Axion Global Asset Management. ‘I think we’re still in the middle of it unfortunately, the game isn’t over.’
Celsius has hired restructuring lawyers and is looking for possible financing options from investors, the Wall Street Journal reported, citing people familiar with the matter. Celsius is also exploring strategic alternatives including a financial restructuring, it said.
Coinbase is planning to slash nearly a fifth of its workforce as the value of the digital currency market continues to crumble.
The company, which has seen its value plunge 85 per cent since it listed on the Nasdaq stock exchange in New York last April, said it would cut 1,100 staff, about 18 per cent of its total employees, as part of a restructuring plan.
It follows a move from rival crypto exchange BlockFi, which this week announced plans to cut 170 jobs – 20 per cent of its staff.
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Bitcoin Price (BTC)
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Down 8.34%
$19.37 ETH - Up 3.10% -— (Ethereum)
Can't even imagine that level of stupidity.
“One in seven of those buying crypto during the pandemic borrowed money to do so.”
i read in one article that it was one in four ... and that level of speculation makes for a brittle situation in which the house of cards is extremely unstable, because a small drop can turn into a MASSIVE drop as owners are forced to sell, no matter the price, to stop losses if they can’t cover margin calls ... that level of margin purchases was what caused the 1929 panic ...