Crypto market crashes anew as trading platform Celsius freezes up

Bitcoin and other cryptocurrencies plunged through the weekend and into Monday as high inflation sent investors running for the exits and caused major trading platforms to seize up.

Stock markets also sell off as high inflation rattles investors

After peaking in November 2021, bitcoin has lost half of its value. A man stands next to the bitcoin sign in Riga, Latvia, Nov. 9, 2017. (Ints Kalnins/Reuters)


  • Crypto companies announce layoffs

Bitcoin and other cryptocurrencies plunged through the weekend and into Monday as high inflation sent investors running for the exits and caused major trading platforms to seize up.

Bitcoin was changing hands below $23,000 US at one point on Monday morning, down 20 per cent since Friday and enough to push the value of the world's dominant cryptocurrency down to its lowest point since December 2020.

The sell-off prompted a major crypto exchange, called Celsius, to halt withdrawals on Sunday evening, meaning investors can't access their funds. "We are taking this action today to put Celsius in a better position to honour, over time, its withdrawal obligations," said the exchange, which had roughly $11 billion in customer deposits on its books.

Celsius was offering depositors returns of more than 18 per cent in exchange for keeping their cryptocurrencies on the company's platform. Another crypto platform Terra offered similar yields on customer deposits. But that was before a surge in customer withdrawals prompted the collapse of Luna, the company's so-called "stablecoin," which lost 99 per cent of its value in May.

"They were promoting their services as a better savings account, but in the end, you're just another unsecured lender," said Cory Klippsten, CEO of Swan Bitcoin, who has been publicly skeptical of Celsius' business model for years. "This was yet another bank run."

Unlike with conventional lenders such as banks that are highly regulated, most cryptocurrency platforms are not backstopped by deposit insurance like the Canada Deposit Insurance Corp., which ensures deposits at regulated institutions up to a certain dollar amount. That means depositors will not necessarily be able to get all of their money even if and when trading resumes.

Quebec's pension plan, the Caisse de dépôt et placement du Québec, is one of the financial backers of Celsius, having participated in a $400 million investment into the platform last November.

"Celsius has been impacted by very difficult markets in recent weeks, more specifically, the strong volume of withdrawals by customers," a spokesperson for the pension plan told CBC News in a statement. "Celsius is taking proactive action to uphold its obligations to its customers … and has honoured its obligation to its customers to date. Our team is closely monitoring the situation."

Other crypto exchanges seize up

Other major crypto exchanges also had problems dealing with the deluge of trading orders, with Binance saying it has "temporarily paused" Bitcoin withdrawals.

Other crypto trading platforms announced staffing cuts. — which made a big splash with a glitzy ad featuring Matt Damon extolling the virtues of cryptocurrency that aired during the Superbowl — announced it would be laying off about five per cent of its workforce, or about 260 people, CEO Kris Marszalek said on Twitter.

Another cryptocurrency company, BlockFi, announced that it was in the process of laying off 20 per cent of its staff.

"This decision was driven by market conditions that have had a negative impact on our growth rate and a rigorous review of our strategic priorities," the company said in a blog post.

The sell-off brought the total value of all cryptocurrencies below $1 trillion US, a threshold it has not dipped below since January 2021. The value of crypto assets peaked at about $2.9 trillion in November 2021 before countries around the world started seeing inflation rise to its highest point in decades. 

On Friday, data showed the U.S. inflation rate rose to 8.6 per cent in May, the highest level in more than 40 years. Investors and market watchers had hoped the figure would ease from the 8.3 per cent level it hit the previous month, but instead it went even higher, a troubling sign that central bank efforts, such as rate hikes to rein in inflation, aren't working.

Ed Moya, senior market strategist at foreign exchange firm Oanda, said the cryptocurrency market is showing signs of capitulation.

"There's fears everyone got inflation wrong," he said in an interview. "You're seeing every risky asset get sold, and with crypto being the riskiest, it's under tremendous selling pressure."

Colin Cieszynski, a strategist with SIA Wealth Management in Toronto, said high inflation is causing investors to run away from anything deemed to be risky.

"Cryptocurrencies are still kind of an emerging market that people were trading when they were feeling good, when they were enthusiastic when they were willing to take on risk and when they had access to cheap money to do so," he said in an interview Monday. 

"A lot of those factors have changed over the last few months … what we've seen over the last few days, in particular, and why we've had this new sell off, is a sense that money is becoming more expensive."

Buy and 'hodl'?

Not all crypto owners are rattled, however. Lucah Rosenberg-Lee, a retail investor from Toronto who has owned Bitcoin since 2017, has seen strong gains over years despite frequent crashes.

Like many in the space, Rosenberg-Lee abides by the "hodl" mindset — a meme on the investment concept of holding that is also an acronym meaning "hold on for dear life," and never sell when panic sets in, as he describes it.

He has about half of his investments in cryptocurrency and has no plans to divest.

"I'm just going to keep it as long as I can," he told CBC in an interview. "I have not bought more today, but I think there are a lot of people who are going to."

"In terms of going back up, it will 100 per cent go back up, it's just about when," he said.

Stock markets also sell off

Cryptocurrencies weren't the only market walloped by stubbornly high inflation Monday. Stock markets around the world plunged precipitously, as speculation mounts that the U.S. Federal Reserve will have to raise its benchmark interest rate by 75 basis points on Wednesday, as it scrambles to rein in runaway increases in the cost of living.

Major U.S. markets including the Dow Jones Industrial Average, the S&P 500 and the technology-focused Nasdaq were all down by between three and five per cent.

The decline for the S&P brings the broadest U.S. stock index down more than 20 per cent from its highs, which means it has met the technical requirement of a bear market.

Things were no better in Toronto with the benchmark TSX stock index off 532 points, or almost three per cent.

All 11 subgroups of the index, from energy to banks, technology and health care, were lower.


Pete Evans

Senior Business Writer

Pete Evans is the senior business writer for Prior to coming to the CBC, his work has appeared in the Globe & Mail, the Financial Post, the Toronto Star, and Canadian Business Magazine. Twitter: @p_evans Email:

With files from The Associated Press


To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

Become a CBC Member

Join the conversation  Create account

Already have an account?