After years of rapid growth and lofty promises, certain corners of the crypto market faced a harsh reality in 2022. Bitcoin and Ethereum, the two largest digital assets by market value, experienced significant declines as adverse conditions swept through the sector. The downturn intensified as the Celsius Network platform announced measures that halted certain operations, signaling a broader tightening of liquidity across the ecosystem.
As the shockwaves spread, the losses on major digital currencies became stark. Bitcoin and Ethereum had plunged by 14.7% and 17.58% respectively at the time this analysis was written, following Celsius Network’s decision to pause all processes and to restrict withdrawals for its roughly 1.7 million customers. Celsius, one of the world’s largest lenders in the realm of digital assets, faced mounting scrutiny as liquidity pressures grew and investor confidence waned.
The platform framed the paralysis as a necessary step to stabilize liquidity and safeguard assets while it implemented measures to protect clients in what it described as extreme market conditions. The liquidity crisis in crypto markets had been building since the Luna and Terra collapses in early May, a sequence of events that intensified market stress and triggered a broader reevaluation of risk across the sector.
In recent weeks, Celsius has borne the weight of the crypto downturn. The value of the platform’s assets reportedly halved from December levels, slipping from $24 billion to around $12 billion. That decline spurred many smaller investors to withdraw their funds, creating a liquidity gap that made the platform’s situation increasingly precarious and difficult to manage with traditional liquidity cushions.
The stoppage of trading and the blocking of withdrawals drew sharp protests from thousands of Celsius users who watched as their holdings became less accessible while prices continued to drift downward. For many, the immediate consequence was a substantial erosion of value as markets did not recover quickly, highlighting the volatility that characterizes speculative crypto assets.
At the time of publication, the price of Bitcoin hovered near €22,545 per unit, a far cry from the near €70,000 peak anticipated during the prior November’s market optimism. The gap between those expectations and reality underscored a wider shift in sentiment among investors in North America who track the asset class closely for both opportunity and risk, particularly in Canada and the United States where regulatory scrutiny and institutional involvement have grown in tandem with retail interest.