Moneycontrol Pro Panorama | Crypto Mayhem

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The most speculative asset classes are often the most volatile too. As the fears of the US Federal Reserve sharply raising interest rates spook markets, cryptocurrencies losses far outstrip those in equities.

Bitcoin is trading at its lowest level since December 2020 and the aggregate market value of the top cryptocurrencies is down more than two-thirds its peak value to less than $1 trillion now.

Apart from the fear of the Fed, certain exchanges blocked redemption of crypto tokens leading to more mayhem.

A couple of days ago, exchange Binance stopped bitcoin redemptions following a similar move by Celsius. The latter is a so-called crypto lender which allowed its users to lend their crypto assets at annual yields of up to 17 percent. Now, why would a crypto lender block redemptions unless it didn’t have enough funds on hand to meet such requests?

The fall is value has also meant traders fleeing the crypto markets. According to the Financial Times, spot trading volumes have halved during March-May compared to the year-ago period.

As a result, crypto exchanges have started laying off people. Coinbase, the crypto company which made a successful initial public offer of its shares in April 2021, is going to slash almost a fifth of its staff. BlockFi, another crypto lending platform, plans to lay off 20 percent.

Now, that’s a familiar refrain we have heard before in multiple sectors.

However, while markets like equities and commodities have seen booms and busts, and