Bloomberg News reports that crypto lender Celsius Network Ltd.’s shocking freezing withdrawal announcement triggered a rush by the companies in the digital assets sector to reassure markets about the health of the operations.
The Looming Uncertainty
Tron, Nexo, Tether, and BlockFi were among the few companies that took to Twitter hours following the announcement of Celsius. This accelerated a crypto rout that eliminated more than $100 billion of the market value. With haunting moments of the collapse of the past month of Terra ecosystem still lingering in the minds, focus on turning to decentralized finance-related projects offering eye-popping yields as well as stablecoin bills as pegged to the US dollar, which is an asset.
The chief executive of BlockFi, a crypto lender, Zac Prince, stated that its systems were normally operating and that it has “zero exposure” to the assets like a version of Ether (stETH) that appeared to lose the peg to Ether over the weekend.
Another step further was Nexo, which is another competitor. It was revealed by the London-based company that it had offered to purchase the remaining qualifying assets of Celsius, followed by a tweet that it has formally sent an offer to Celsius.
The announcement by Celsius compounded a slump in crypto that was driven by the anticipations of higher interest rates following worst-than anticipated US inflation of Friday’s data. Bitcoin was found extending a seven-day drop by plunging 15% to $23,250, the lowest since December 2020. Ether stumbled by 18%, and the Solana and Avalanche altcoins suffered a decline of a similar magnitude.
Bloomberg News reports that although stablecoins weathered the selloff mostly, they were found not to be immune. Justin Sun’s, the crypto entrepreneur’s newly introduced algorithmic stablecoin USDD, slid to as low as 98.4 cents from the $1 peg and was found to be trading at 99.2 cents in London at 4 PM.
Sun, the Tron blockchain network’s founder, stated that the platform had added $700 million worth of USDC, another stablecoin, to the reserves meant to serve as a backstop to the USDD peg. The larger stablecoins like Tether and USDC are backed by equivalent dollar assets and the dollar.
Tether was trading on Monday afternoon at its dollar peg after sliding briefly by as much as 35 basis points, per data compiled by Bloomberg.
