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Solana is the Ethereum killer?
Solana is a high-performance blockchain taunted to solve the blockchain scalability problem
The crypto market in India is significantly crashing for the second time in a month. Given the current negative risk sentiment, a turnaround is unlikely very soon. In this latest crash, the crypto market's value slumped under $1 trillion for the first time since January 2021.
The crypto market's sell-off resumed on Tuesday, with Bitcoin and Ether hitting fresh 18-month lows. Bitcoin is the most popular cryptocurrency, with Ether coming in second. Not only the top two, but all major cryptocurrencies have been trading in the red recently, putting even long-term investors to the test. What caused this most recent catastrophe, and is there any hope for investors?
The decline began on Friday of last week, coinciding with a sell-off in US financial markets, sparked by higher-than-expected inflation and worries of more aggressive interest rate rises by the US Federal Reserve. While crypto markets should ideally operate independently of regular markets, they have previously been susceptible to changes in the mainstream financial system.
The leading bitcoin lending service, Celsius Network, stopped withdrawals on Monday, adding to the negative news. Celsius, located in New Jersey, declared in a blog post that withdrawals and transfers between accounts had been halted "to stabilise liquidity and operations while we take steps to preserve and protect assets." The decision was attributed to "extreme market conditions," with the goal of placing "Celsius in a better position to honor, over time, its withdrawal obligations." It has not yet provided a date for the resumption of withdrawals.
The crypto market had suffered a knock earlier in May with the shocking meltdown of the TerraUST, an 'algorithmic' stablecoin whose value is secured by a sister token called Luna.
Because stablecoins are not subject to extreme swings like other cryptocurrencies, the system was rattled by the deep-red crisis, which wiped out $40 billion in investor assets.
Celsius is a cryptocurrency lender, which effectively implies it is a cryptocurrency bank.
Customers may deposit their coins with crypto lenders in exchange for interest and then lend out cryptocurrencies to earn money.
Celsius is a major player in the crypto loan sector, with assets of roughly $11.8 billion. Savings in crypto parked with these lenders are known to offer returns to the tune of 17% to 20%.
These financial services are more convenient to use than traditional banks, yet they lack regulatory control.
According to a story in the Financial Times, the value of assets stored with Celsius on May 17 was less than $12 billion, compared to more than $24 billion in December 2021.
This is the crypto market's second significant implosion in less than a month. Given the current negative risk sentiment, a turnaround is unlikely very soon. For the first time since January 2021, the crypto market's worth fell below $1 trillion in this latest fall.
Bitcoin has dropped over 70% after reaching a record high of $69,000 in November of last year. On Tuesday, it was trading in the $22,000 range. Ether, the second most valuable coin, is down 75% from its November peak of $4,869.
The most recent accident is likely to expedite the government's scrutiny procedure. According to the Associated Press, two senators in the United States presented legislation on Tuesday to create a regulatory framework for the cryptocurrency business.
