Bitcoin, Ethereum extend poor performance on fears of Celsius bankruptcy

The Korea Times

The Korea Times

Finance

Mon, October 2, 2023 | 09:26

Markets

Bitcoin, Ethereum extend poor performance on fears of Celsius bankruptcy

Posted : 2022-06-26 15:49

Updated : 2022-07-03 16:23

Seen above is Bitcoin's real-time price fluctuation between May 27 and June 26. Screenshot from CoinMarketCap

By Lee Min-hyung

Major cryptocurrencies continue to show lukewarm performance on growing fears over crypto lending platform Celsius Network's possible bankruptcy and global monetary tightening.

Bitcoin and Ethereum, the world's two most valuable cryptocurrencies, failed to achieve an outstanding rebound in their prices after suffering big losses for the past month amid escalating skepticism across the industry, according to data from CoinMarketCap.

After the collapse of the once-promising Terra ecosystem in May, multiple indexes show investors' fear sentiment in the crypto market is on the sharp rise. But with another controversy hitting investors surrounding the recent bank run of Celsius, the market is not displaying any detectable signs of a rebound without any massive capital inflow. Celsius attracted more than 1.7 million investors with a high annual yield of 18 percent in case they deposit their cryptocurrency holdings.

Data from the cryptocurrency price tracker also showed the global crypto market cap nosedived by around 60 percent during the past five months. The total market cap of cryptocurrencies worldwide surpassed $2.27 trillion in early February, but fell to less than $1 trillion as of Sunday.

The latest report on Celsius hiring restructuring experts for its potential bankruptcy added more concern to the crypto industry, prompting uncertainties across the whole crypto market. The price of Bitcoin was around $21 million as of Sunday, down by more than 25 percent from two weeks ago. That of Ethererum also extended a double-digit loss of 20 percent during the same period.

According to the Digital Asset Exotic Index released by Korea's leading crypto exchange operator Dunamu, the current crypto market has entered a "fear" phase, with the index reaching 32.98 as of Sunday. When the figure moves closer to zero, it means investors' fear sentiment escalates further. The index getting closer to 100, meanwhile, means investors are getting greedy on a booming market sentiment.

Another recent controversy sparking security issues of the blockchain technology also came as a bane to the entire crypto industry. Harmony, a U.S.-based crypto startup, notified investors Friday that cyber thieves had stolen $100 million from the firm's Horizon Bridge, which allows crypto investors to swap coins between different blockchains.

Amid the ever-growing skepticism on the industry, global ratings agencies are also moving to downgrade the credit ratings of global crypto exchange operators.

Moody's, one of the major ratings agencies, recently downgraded its ratings of Coinbase, the largest crypto exchange in the U.S., citing the firm's falling revenue stemming from the freezing crypto market. Moody's cut down the firm's Corporate Family Rating to Ba3 from Ba2.

"Today's rating action reflects Coinbase's substantially weaker revenue and cash flow generation due to the steep declines in crypto asset prices that have occurred in recent months and reduced customer trading activity," Moody's said on Thursday.

mhlee@koreatimes.co.kr