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Investors are concerned that another crypto meltdown may pull down other major players.

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Investors are concerned that if Celsius falls, other sectors of the crypto market would be flooded.

Investors are concerned about a broader contagion from a liquidity issue at cryptocurrency loan firm Celsius, which might bring down other significant players in the sector.

Celsius recently halted all account withdrawals, raising concerns that business is set to go bankrupt. Like a bank, the organization lends out clients’ money, but without the stringent insurance requirements that traditional lenders impose.

On Tuesday, bitcoin fell below $21,000, extending severe losses from the previous day and plunging to 18-month lows. According to CoinMarketCap data, the total value of all digital tokens fell below $1 trillion for the first time since early 2021.

Crypto investors are concerned that the likely collapse of Celsius will exacerbate the market’s problems, which were already fragile following the fall of $60 billion stablecoin Terra. Celsius was a Terra investor with “limited” exposure to the project, according to the company.

“Everyone is definitely prepared for additional fall in the medium term,” said Mikkel Morch, executive director of cryptocurrency hedge firm ARK36.

“Bear markets have a habit of uncovering previously concealed flaws and overleveraged ventures, so events like the Terra ecosystem unwinding last month could happen again.”

A liquidation of Celsius’ assets, according to Monsur Hussain, senior director of financial institutions at Fitch Ratings, would “further disrupt the valuation of cryptoassets, leading to a wider wave of contagion within the crypto world.”


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