Celsius, which is a famous crypto lender from the USA, has announced that it is going to freeze withdrawals on its platform. With more than 1.7 million customers, this is not something that can be taken lightly. We have already seen how a lot of crypto firms use such tactics only to declare bankruptcy or claim they were being hacked.
But how did it all start? Two of the major crypto tokens collapsed, which shook the entire crypto sector as a whole. On top of that, the good performance of stocks and soaring inflation also dented the bull run in cryptocurrencies.
Just recently, BTC also dropped below the $20K support level, which removed 60% of its total value. In total, the market capitalization of cryptocurrencies dropped from $3 trillion to just $900 billion.
So it is not just Celsius's fault that things have gone wrong - But many are still angry at Celsius while others are thinking about pulling their investments out of crypto.
Similar To Dotcom Crash
This drop in cryptocurrencies has made some experts compare it to the dot-com crash during the early 2000s. At that time, everyone was investing in tech stocks without actually looking at whether the company had any real business or not. If you think about it, the same thing is happening in crypto right now - There are a lot of crypto projects, but only a handful of them have any real-life usage applications.
What is Celsius?
Celsius is a US crypto lender that offers unbelievably high-interest rates to potential investors. The users had to deposit their crypto holdings (coins) on the platform, which would then invest the money to earn profit from the crypto market.
Celsius was heavily reliant on wholesale crypto investments, and after the investments turned south, the company became unable to meet the client's withdrawal requests. In simple words, Celsius didn't earn what it was hoping from the crypto investments and was thus unable to pay the customers.
This freezing of redemption at Celsius is just like that if a small bank closes its doors to the customers. And with the current situation in the crypto market (continuous bearish trend), it seems that Celsius may continue to face problems!