Celsius Crypto Price Tanks 40% After Freezing Withdrawals

  • The Celsius (CEL-USD) network is in hot water after freezing withdrawals this past weekend.
  • Investors are drawing comparisons between the platform and Robinhood (NASDAQ:HOOD).
  • The Celsius crypto, CEL, is seeing a massive downturn as a result of the news.
Celsius (CEL-USD) crypto logo over dark chart background
Source: shutterstock.com/Ivan Babydov

The Celsius (CEL-USD) crypto is taking a beating after angering investors across the market. Responding to this weekend’s crypto crash, Celsius has frozen activity on its platform. The decision has investors now drawing a comparison between Celsius and Robinhood (NASDAQ:HOOD).

Celsius is a DeFi platform launched in 2018. Its claim to fame is its lending and farming tools. It boasts one of the most robust lending tools on the market; users can stake a number of stablecoins, gold-backed cryptos, Bitcoin (BTC-USD), Ethereum (ETH-USD) and other altcoins.

But it doesn’t just offer staking — it offers some of the most impressive yields across the market. Staking stablecoins can offer yields of up to 9%. Altcoins can provide yields of over 18%. Moreover, the network’s borrow tool allows investors to take crypto loans, providing options for those who need funds immediately.

Celsius also receives attention for its swap platform. The swap tool, along with Celsius’ in-app exchange, are the avenues through which Celsius users bring money onto the platform, access all of the other tools it offers, and either swap their assets for others or take them off-chain. These are the doors taking users in and out of the platform.

Celsius Crypto Sees 40% Nosedive During Withdrawal Freeze

The crypto market is seeing quite a drop today, with many assets losing over 10%, if not more. But perhaps no asset is suffering quite like the Celsius crypto, CEL.

Bitcoin prices are down 18%, and Ethereum prices are down 20%. Their respective losses are causing the rest of the market to slump. In response to this, Celsius decided to freeze all withdrawals from its platform. It also froze its swap and transfer features. Citing “extreme market conditions,” the decision is meant to keep liquidity stable on the platform, protecting its assets from being moved elsewhere by panicked investors.

In the day since Celsius decided to undergo this freeze, CEL crypto prices have tanked. Immediately, the token plummeted 70%. The move proved hugely controversial among investors. Some drew comparisons between the project and Robinhood, which froze meme stock trading at the height of the GameStop (NYSE:GME) run-up in early 2021. These investors are calling Celsius “the new Robinhood,” while others say the token’s plummet is not a “crypto problem,” but a corporate failing. Celsius is down nearly 40% over the past 24 hours.

This dramatic failure of the Celsius crypto is leading to network competitors stepping in. Nexo (NEXO-USD), which operates a similar DeFi platform, is offering to buy out Celsius’ assets. The platform published a letter of intent to buy Celsius’ collateralized loan assets, though it has not specified its price.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.

Article printed from InvestorPlace Media, https://investorplace.com/2022/06/celsius-crypto-price-tanks-40-after-freezing-withdrawals/.

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