What is happening exactly? 

As we enter June 2022, all markets worldwide are continuing to decline due to a range of external factors. These include (but aren’t limited to) the Russia-Ukraine war, rising global inflation rates and the fear of a potential global recession.

Bitcoin dropped below $21,000 USD, the lowest it’s been since December 2020. Ethereum has also dropped considerably since the start of the month, trading at below $1300 USD. Global crypto fintech platform Celsius has announced that they are pausing all withdrawals due to the current market turmoil, impacting its estimated 1.7 million users.

Figure 1: Bitcoin 1 month USD price chart 14 June

Rising global inflation rates

The US stock market has been in decline since recording its worst trading period since 2020. 

The S&P 500 is down more than 20% from the record high it set in January, and is now in a bear market.

This can be partly attributed to the US Federal Reserve’s decision in May 2022 to raise interest rates by 50 basis points in an attempt to tackle rising inflation rates. 

New inflation data has since revealed, however, that inflation grew another 8.6% in May, the largest increase in over 40 years. 

Closer to home, things aren’t looking much brighter. Inflation is at a 20-year high and the Aussie share market is down 8% since the start of the month. 

The crypto market has also shed $100 Billion overnight following the release of the latest official US inflation data.

Crypto lender Celsius pauses withdrawals

Global crypto fintech platform Celsius has announced that they are pausing all withdrawals due to the current market turmoil, ​​impacting its estimated 1.7 million users:

The modern finance app is designed to help investors take opportunities in decentralized finance, a market which has been heavily impacted by the recent price drops. Celsius native token $CEL is currently trading at $0.33, down 92% this year. 

This news has heightened growing market fears and may have contributed to the recent Bitcoin crash.

It was reported today that Crypto lending platform and Celsius competitor, Nexo has expressed interest in buying out a certain loan portfolio of its former rival.

It’s important to zoom out

Today’s crash has been rough for some investors, but it is nothing new. In fact, Bitcoin has crashed more than 80% three times since 2012. It’s always important to zoom out on the charts and understand how market cycles work. 

A market cycle is a blueprint of all the stages between the peak and low of a market. They occur in all financial markets and repeat over time. The crypto market is no different, though it is volatile. 

The Fear & Greed Index which measures the crypto market sentiment, currently sitting at 8 out of 100, or ‘Extreme Fear’. This is the lowest level since March 2020 when COVID lockdowns begun.  

This is still a painful time and it’s likely that your portfolios aren’t looking as green as they once were.

If you have any questions, please reach out to us – we’re here to help.

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