First Mover Asia: What Analysts Are Saying After Crypto Lender Celsius Paused Withdrawals; BTC Drops Below $23K

Some observers of digital asset markets criticized the move but others said that Celsius could be protecting user funds; ether plummets 17%.

AccessTimeIconJun 14, 2022 at 12:43 a.m. UTC
Updated May 11, 2023 at 6:41 p.m. UTC

Good morning. Here’s what’s happening:

Prices: Bitcoin and other cryptos have a dark day.

Insights: Observers of digital assets react differently to Celsius's announcement to pause withdrawals.

Technician's take: (In place of Technician's Take, First Mover Asia is re-publishing a recent Consensus 2022-related column by CoinDesk columnist Daniel Kuhn.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.


Bitcoin (BTC): $22,209 -16.6%

Ether (ETH): $1,193 -17%

Biggest Gainers

There are no gainers in CoinDesk 20 today.

Biggest Losers

Asset Ticker Returns DACS Sector
Ethereum ETH −16.4% Smart Contract Platform
Bitcoin BTC −16.3% Currency
Dogecoin DOGE −15.7% Currency

A Dark Day for Bitcoin and Other Cryptos

Investors had their choice of comparatives for describing bitcoin's deep dive on Monday.

Bitcoin sank to its lowest level since December 2020.

The largest cryptocurrency by market capitalization fell to less than a third of its all-time high of nearly $70,000 just eight months ago and less than half of where it perched at the start of 2022.

It was down 16% over the past 24 hours, a rare single-day, double-digit dip, and off over 30% from a month ago when it settled around $30,000 following the collapse of the terraUSD token. It fell for the seventh consecutive day.

By most any measure, bitcoin had a very, very, very bad day.

So did cryptos in general, whose combined market cap tumbled below $1 trillion for the first time since early 2021 amid ongoing inflation fears and a torrent of bad news from various protocols, including crypto lending platform Celsius's announcement that it was pausing withdrawals amid "extreme market conditions."

Bitcoin was recently trading at about $22,500, down more than 16% over the past day. As for major altcoins, the question wasn't whether they were in the red but by how much. Ether, the second-largest crypto by market cap, was changing hands at roughly $1,200, off over 17% during the same period and its lowest level since January 2021. CRO was off more than 20% at one point amid news that the crypto exchange would pare about 5% of its workforce, roughly 260 jobs. Wrapped bitcoin (WBTC) and TRX were down nearly the same at that time.

Market analysts had a lot to say about the plunge. Little of it offered immediate comfort.

"It's a storm," 3iQ Digital Asset's head of research Mark Connors told CoinDesk in a phone interview.

"Bitcoin bears certainly are in ruckus mode, berating the largest crypto the way a schoolyard bully seeks out for tormenting the same easy mark," Uphold financial consultant Rich Blake wrote.

"Sentiment for cryptos is terrible as the global crypto market cap has fallen below $1 trillion dollars," Oanda senior analyst Edward Moya wrote. "Bitcoin is attempting to form a base, but if price action falls below the $20,000 level, it could get even uglier.

‘’As inflation proves to be an even trickier opponent to beat than expected, bitcoin and ether are continuing to get a severe bruising in the ring," Hargreaves Lansdown senior investment and markets analyst Susannah Streeter wrote. "They are prime victims of the flight away from risky assets as investors fret about spiraling consumer prices around the world."

Cryptos' suffering tracked the hammering of major equity indexes with technology stocks at the forefront of the carnage. The S&P 500 fell 3.8%, re-entering bear market territory – meaning that it has lost 20% of its value from its previous high. The tech-heavy Nasdaq, which hit bear market ground weeks ago, was down a whopping 4.6%, while the Dow Jones Industrial Average was off 2.7%.

Even gold, a traditional safe-haven asset, declined by nearly 3%.

Investors will be anxiously watching the U.S. Federal Reserve's two-day meeting, which begins Tuesday and is widely expected to culminate with a 50-basis point interest rate hike as part of an ongoing effort to stem stubbornly high inflation. The latest U.S. Consumer Price Index report showed inflation rising 8.6%, a four-decade peak.

3iQ's Connors noted optimistically that the current crypto spiral was "within the band of growth" relative to other steep drops in crypto's 13-plus-year history. "I wasn't around in 2018 for that $20,000 to $3,000 move, but the playing field is much different now as far as the number of people in it (and) the presidential mandate," he said, referring to U.S. President Joe Biden's executive order regarding crypto regulation. "If you take the band of volatility over the past five years, we're still within it."

Connors also said: "The adoption rate the last time we checked both general wallets as well as institutions and mentions in 10-Qs are all at elevated levels. The fundamentals are intact."

Still, the crypto industry has found itself struggling anew Monday with a now less-certain future. Lending platform BlockFi said it would slice about 20% of its workforce. and BlockFi's cuts followed closely after similar announcements by the Winklevoss twins-led exchange Gemini and Middle Eastern crypto-exchange Rain Financial, among others. On Monday, Binance, the world's largest major crypto exchange by trading volume, paused withdrawals for a brief period.

"As far as support levels, the next few days surely will test digital assets if a faster pace of tightening and more aggressive rate hikes are announced," Uphold's Blake wrote. "For the moment, extreme market conditions and fed policy updates are exacerbating the consequences for crypto assets."


S&P 500: 3,749 -3.8%

DJIA: 30,516 -2.7%

Nasdaq: 10,809 -4.6%

Gold: $1,821 -2.9%


Analysts Differ on Celsius Pause

Prominent crypto lending firm Celsius paused withdrawals and swap products early Monday, citing "extreme market conditions” amid a market downturn. Bitcoin and other cryptocurrencies lost over 12% of total market capitalization as traders responded pessimistically to the latest U.S. Consumer Price Index report showing that inflation continued to rise in May.

Celsius’s announcement followed an April dictum in which Celsius told non-accredited investors that they could no longer transfer funds. The firm’s products are popular among crypto investors, and it offers yields of over 17% on deposits – a rate higher than those provided by most banks.

While retail crypto investors winced over the news, sentiment among analysts and market observers was mixed as some criticized the move while others said Celsius could be protecting user funds.

“Although such a decision is not unusual, as this is not a new phenomenon for centralized financial institutions, it will certainly affect the platform’s users and their desire to use centralized platforms like Celsius,” said Kate Kurbanova, co-founder of risk management platform Apostro, in an email to CoinDesk.

“I think that this decision was made while taking the Black Thursday of 2020 as prices of major cryptocurrencies fell steeply and caused a cascade of liquidations on lending platforms and its users lost their money,” Kurbanova explained.

Kurbanova added that users could choose what risks they consider acceptable, such as risk-facing liquidations and hacks on decentralized platforms but with the ability to withdraw money at any time or use centralized platforms which could be safer from a security standpoint but face a “risk of your assets being frozen for an indefinite period of time.”

Some market observers drew parallels with the implosion of Terra’s terraUSD (UST) stablecoin in mid-May, which caused prices of its related luna (LUNA) tokens to drop nearly 100% and value locked on decentralized finance (DeFi) applications to plunge by $28 billion.

“The broader industry gets very uneasy with the mention of any news or event that can hurt investors, be it retail or corporate following the May episode of Terra’s legacy UST stablecoin collapse,” explained Vadym Synegin, vice president at ecosystem project WeWay.

“Celsius is sending out a message that it is currently insolvent and this is bound to usher in an unprecedented panic withdrawal whenever this access is granted to users. The crypto ecosystem does not respond well to panic events,” Synegin added.

Some analysts opined Celsius could have switched to newer strategies to continue to provide yields to users.

“Finding liquid assets that can pay high returns for $1 billion is not very hard to do; finding liquid assets for $30 billion, whilst keeping returns at such high rates, is almost impossible to do,” said Austin Kimm, director of strategy and investments at, in a Telegram chat. “The only solution is to switch off deposits or move into much less liquid assets such as real estate, or crypto mining equipment.”

Meanwhile, Fabio Pezzotti, CEO of crypto investment fund Iconium, said Celsius’s move to pause withdrawals was a preventive measure to help the firm stabilize liquidity on the popular staked ether (stETH) product.

“During the last few days, rumors began to circulate that Celsius had become insolvent due to its high exposure to stETH, the Ethereum derivative by Lido Finance which began to lose its ETH ’peg’ last week,” Pezzotti said in a chat. “Talking about ’peg’ is not totally correct as stETH are derivative instruments collateralized by ETH 1:1. But since they become redeemable only after Ethereum’s merge, stETH’s price is decided by the market, which has determined a discount factor on the early conversion.

“Celsius was holding stETH to provide returns on the ETH deposited by their clients on its platform. The FUD generated by the stETH depeg and the current market conditions have dried up Celsius' on-hand reserves, forcing the company to pause withdrawals to stabilize liquidity. This is a preventive measure, already seen during market crashes, which serves precisely to avoid a total collapse,” Pezzotti said.

Technician's take

(Editor's Note: In place of Technician's Take, First Mover Asia is re-publishing a column by CoinDesk columnist Daniel Kuhn based on an interview at Consensus 2022.)

Dragonfly Capital’s Haseeb Qureshi thinks there are five problem areas in crypto that you can make a fortune in solving. Those are identity, scalability, privacy, interoperability and UX (user experience).

A former poker player turned venture capitalist and philanthropist, Qureshi looks to blockchain as both a source of revenue and social good.

“The most important thing about crypto is permissionless innovation,” he said. “That’s the idea that you do not need to get a license or a business plan approved. You can just deploy a contract on-chain and it starts getting users.”

And so, Qureshi says, even if crypto has problems, it might prove its utility by allowing anyone to innovate.

At Consensus 2022 in Austin, Texas, CoinDesk asked Qureshi to explain crypto’s growing pains, and how he thinks about its longstanding issues. Here’s what he said (the transcript has been lightly edited for clarity and brevity):


When you think about privacy, everything you do in DeFi [decentralized finance] is viewable. We've gotten used to that in crypto, but that's not the way of the future. There will be some trade-off that we can make that is going to be similar to the kind of privacy we expect in the real world that would still give us the auditability that we care about and that makes DeFi, DeFi.


Right now, you're extremely aware of what chain you're on. You know if you’re on Solana or Avalanche or Ethereum. At some point in the future, almost without a doubt, you will have digital assets and you will interact with applications – and that will be your relationship with [the blockchain].

On the internet, you don't interact with this service or that service. You don't interact with Cloudflare, and you certainly don't give a s**t about TCP/IP. Your allegiance is to your application. So in the future, if you want to do yield aggregation, instead of just looking at Yearn, you’ll look at what's the best yield anywhere in crypto. It will just be like calling out to another server on the internet.


The fastest blockchains do fewer than, like, 1,000 TPS [transactions per second] each. You can argue about the margin there, but the bottom line is that none of them do that much throughput today. And for us to really get to world scale, all blockchains need to be much faster, much more scalable and have a much higher throughput. That applies to rollups and the like, too.

You want to get to not just tens of millions of users but hundreds of millions of users. Further, we talk a lot about users but we don't talk much about access patterns. If you want access patterns that look anything like what people do in Web 2, you need much, much, much more scalability.

You could argue that bitcoin is the most used cryptocurrency because it has the most holders. I don't know the exact numbers, but something like 50% of Americans own crypto. I’d guess more than half [of those] only own bitcoin. And maybe there's one transaction those people, who likely bought BTC on an exchange, actually settle on-chain, if that, per year. If that's the case, the access pattern of someone using bitcoin is that one transaction.

But what's the access patterns of someone using the internet? I don’t know how many Google searches I make per day. So a Web 3 user is gonna result in many transactions per day.


The issue here is having an online identity that can be relied upon. Let's say I want to offer you credit – credit is about your identity, about who you are but also about my recourse. I can only offer you credit if I know that I have a path toward getting it back. If I don’t know who you are and you run away, I'm underwater immediately. There's no recourse.

Related here is bankruptcy. That’s a punishment that survives you and our relationship if you default on the debt. Bankruptcy is one of the most important innovations that we have made in capital markets. It’s very underappreciated in crypto. It’s the way you protect your remaining assets if you cannot pay back all your creditors and how credits can punish you into the future. You cannot do credit without the concept of bankruptcy. But in order to have that, you need Identity. Identity that persists.

Identity is also important for things like marketing. People don't think about this very often, but when you sign up for Coinbase, they can tell whether you're institution or retail. If you’re retail, they throw a bunch of incentives and charge you an arm and a leg for every transaction. If you're an institution, they don’t have to pay anything to get on board, but they charge you BIPs [bitcoin improvement proposals] because you're price-sensitive. Brokerages make all their money from retail.

In DeFi, I can't tell whether you are retail or whether you are Jump [Crypto, the digital asset wing of the eponymous hedge fund]. The protocol treats everyone the same. A centralized exchange’s margin would f**king collapse. Imagine how much money could be made if DeFi businesses could know who their customers are. Nobody can do it today because there's no notion of identity.

We're investing in a company called Quadrantid that allows you to selectively disclose parts of your KYC [know-your-customer] background. So you can selectively disclose your country or other parameters about yourself that you might want to prove to an application or business. This means you could KYC to receive an incentive, but may not have to.


MetaMask, for instance, is not the most user-friendly way to transact. We've already seen some wallets start to do it much better, like Solana’s Phantom – great wallet experience. Keplr – great wallets. We've been able to learn from mistakes, and I think we're going to see more and more innovation.

Important events

9:30 a.m. HKT/SGT(1:30 a.m. UTC): Australia house price index (Q1/QoQ/YoY)

12:30 p.m. HKT/SGT(4:30 a.m. UTC): Japan industrial production (April MoM/YoY)

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" (from Consensus 2022) on CoinDesk TV:

Senators Cynthia Lummis and Kirsten Gillibrand discussed their bipartisan, landmark crypto legislation live at Consensus in Austin, Texas. Plus, chessmaster Garry Kasparov shared his views on the future of crypto.


Tron’s Stablecoin Peg to Dollar Wobbles; Justin Sun Swears to Deploy $2B to Prop Up: Decentralized USD (USDD) fell to as low as 91 cents on crypto exchanges early Monday and was changing hands around 99 cents at press time., BlockFi to Cut Over 400 Jobs Amid Market Rout: The companies are the latest crypto firms to announce job reductions, joining Gemini and Rain Financial, among others.

Bank of England Chief Takes Victory Lap as Crypto Crumbles: Andrew Bailey, the head of the U.K. central bank, was testifying in Parliament on Monday afternoon.

MicroStrategy Now Down $1B on Its Bitcoin Bet: Bitcoin has extended its plunge to a fresh 18-month low, below $23,000.

Binance Resumes Bitcoin Withdrawals After Pause: CEO Changpeng Zhao attributed the issue to a “stuck transaction," and promised a quick fix.

Longer reads

How Much ETH Does Joe Lubin Hold?: As Ethereum gears up for the switch to proof-of-stake, how the network’s tokens have been distributed comes back into focus.

Other voices: Bitcoin Price Plunges Below $23,000 as Crypto Lender Celsius Halts Withdrawals (The Wall Street Journal)

Said and heard

".@CelsiusNetwork is pausing all withdrawals, Swap and transfers between accounts. Acting in the interest of our community is our top priority. Our operations continue and we will continue to share information with the community. More here:" (Crypto lender Celsius on Twitter) ... "This morning we announced that after taking significant time to plan and consider, we are reducing our headcount by roughly 20%. This is not a decision we take lightly and is one that brings us great sadness." (BlockFi CEO Zac Prince on Twitter) ... Bitcoin's price is getting routed today, so hashprice is feeling the pressure too For the first time since 2020, Bitcoin's hashprice is below $0.11/TH/day Currently, Bitcoin's USD hashprice is $0.1054/TH/day" (Hashrate Index, bitcoin mining data analytics by Luxor Mining, on Twitter) ... "MicroStrategy has just transferred 2089 #Bitcoin ($48 million) to a new wallet for the first time ever, likely planning to dump their bags. They’re now moments away from facing the largest liquidation in history. Ouch." (CryptoWhale/Twitter)


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Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

James Rubin

James Rubin was CoinDesk's U.S. news editor based on the West Coast.