Bitcoin price hits 18-month low amid crypto turmoil

Experts say prices are likely to plummet further, as one high-profile crypto lender halted withdrawals for its 1.7 million customers.

Bitcoin on Monday fell as low as $US24,900, before recovering slightly to $US25,500, falling seven per cent in 24 hours. Picture: AFP

Bitcoin has plunged to a new 18-month low, dipping under $US25,000 ($35,600) for the first time since December 2020, as a high-profile crypto lender halted withdrawals and economists warn there’s more pain still to come for the digital currency.

Bitcoin on Monday fell as low as $US24,900 at 1pm AEST, before recovering slightly to $US25,500, falling seven per cent in 24 hours.

The world’s dominant cryptocurrency was worth as much as $US68,000 in November 2021, plummeting about 63 per cent in seven months, and crypto experts say the drop will likely continue.

“This could be a rough weekend for crypto,” Euro Pacific Capital chief economist Peter Schiff warned on Sunday.

“Bitcoin looks poised to crash to $US20,000 and ethereum to $US1000.

“If so, the entire market cap of nearly 20,000 digital tokens would sink below $US800 billion, from nearly $US3 trillion at its peak. Don’t buy this dip. You’ll lose a lot more money.”

Smaller cryptocurrencies have also been savaged, with solana, cardona, dogecoin, polkadot, tron and avalanche all suffering double-digit drops in value over the past 24 hours.

The world’s second most popular digital token, ethereum, suffered a 20 per cent drop over the weekend, falling to $US1946, its lowest level since March 2021.

One of the world’s largest cryptocurrency lenders, The Celsius Network, meanwhile announced it was “pausing all withdrawals, Swap, and transfers between accounts”. 

The company’s website touted a 18.63 per cent annual yield on crypto deposits, and promised users that their crypto holdings would be “safe forever”.

“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts,” the company announced to its 1.7 million customers on Monday.

“We are taking this action today to put Celsius in a better position to honour, over time, its withdrawal obligations.

“We understand that this news is difficult, but we believe that our decision to pause withdrawals, Swap, and transfers between accounts is the most responsible action we can take to protect our community. We are working with a singular focus: to protect and preserve assets to meet our obligations to customers.

“Our ultimate objective is stabilising liquidity and restoring withdrawals, Swap, and transfers between accounts as quickly as possible. There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.”

Celsius’s holdings are tied up in crypto – the company reportedly borrowed $US500m from the dollar-pegged stablecoin Tether, a loan that is collateralised in bitcoin.

“If bitcoin drops, they give us a margin call [and then] we have to give them more bitcoin,”

Celsius’s holdings are tied up in crypto – the company reportedly borrowed $US500m from the dollar-pegged stablecoin Tether, a loan that is collateralised in bitcoin. Picture: AFP

Celsius chief executive Alex Mashinsky told The Financial Times late last year.

Celsius’ chief financial officer was reportedly arrested in Israel in November for suspected money laundering, fraud, and sexual assault.

It comes after stablecoin Terra crashed in mid-May, with US politicians promising to try and deliver new laws to regulate stablecoins by the end of the year.

Experts have also warned about an upcoming merge problem weighing on ethereum. The cryptocurrency is set to transition to the more energy-efficient proof-of-stake protocol, as opposed to proof-of-work, which bitcoin currently uses.

With proof-of-stake, cryptocurrency miners will no longer be needed, and instead people will stake their coins to check new transactions and add them to the blockchain, a process that will potentially consume 99 per cent less energy than proof-of-work.

The transition is set to be delayed from August however after ethereum co-founder Vitalik Buterin noted a so-called “difficulty bomb”, a code within ethereum meant to increase the computing difficulty for mining.

The chief executive of financial advisory and asset management firm Devere Group however has predicted that the price of bitcoin will bounce significantly in the fourth quarter of this year.

“The price recovery has started, probably much to the chagrin of crypto cynics and bitcoin bashers,“ Nigel Green said last week, before Monday‘s drop.

“I believe that we’ll soon see a bull run that will lead to a significant bounce in the fourth quarter of the year for the world’s leading digital currency.

“Bitcoin is currently highly correlated to leading global stock markets, such as Wall Street’s S&P500, and I’m confident that the recent market downturn is close to the bottom and a rally is imminent.”

Bitcoin will benefit from a stock market rally as investors move back into riskier assets, he added.