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Celsius company, a company in the field of cryptocurrency lending is known to be experiencing a liquidity crisis. The current problem makes crypto investors worried about a domino effect that could bring down other major players in the crypto market
Now in the medium term, everyone is really gearing up for more downside, according to the executive director of crypto hedge fund ARK36, Mikkel Morch.
Bear markets (downward market trends) they have a way of exposing and spotting previously hidden weaknesses and exaggerating projects so it's possible we see events like the restoration of the Terra Luna ecosystem last month.
Then the senior director of financial institution Fitch Ratings, Monsur Hussain said the liquidation of Celsius's assets would greatly shake the valuation of crypto assets. With its direction having a wider impact in the crypto sphere.
But Not long ago, Celsius they decided to temporarily stop account withdrawals. This decision sparked fears of bankruptcy in every user.
It is known that Celsius is in a decentralized financial sector. The goal is to reinvent traditional financial products such as loans without intermediaries such as banking.
The company also owns many popular assets in the DeFi world, for example staked ether, a version of crypto ether that promises to reward users for deposits. "If you go into full liquidation, you have to close this position," said Omid Malekan, professor at Columbia Business School.
But competitors Celsius, Nexo and BlockFi tried to calm things down. For example Nexo said it had "solid liquidity and equity positions" and offered to acquire some of its Celsius loan portfolio, but it said it was turned down.
Meanwhile BlockFi said all of its services were "continuing to operate normally" and had "zero exposure" to staked ether.