Editor's Pick JUNE

PICK June By Jordyn Austin 2022 Private Client Consultancy THE CRYPTO CRASH

ON MONDAY THE 13TH OF JUNE, THE CRYPTOCURRENCY MARKET EXPERIENCED A GROUND-BREAKING SELLOFF. THIS CAME AFTER CELSIUS, A MAJOR CRYPTO LENDING PLATFORM THAT ESSENTIALLY FUNCTIONS LIKE A BANK, ANNOUNCED THAT IT WOULD MOMENTARILY STOP WITHDRAWALS. THEN, FOR THE FIRST TIME IN OVER A YEAR, CRYPTO’S OVERALL MARKET CAP PLUMMETED BELOW $1 TRILLION. A rep for Celsius explained that because of ‘extreme A number of firms on Wall Street have said that the JUNE 2022 market conditions,’ they would need to take time to central bank will likely raise interest rates by 0.75%. pccwealth.com ‘stabilise liquidity and operations’ so that they could fulfil This will have a subsequent effect on the markets at all future withdrawal obligations. They also mentioned that large. their almost 2 million users would still be able to accumulate rewards. While it seems that the news from Celsius did drive the mass selloff, the crypto market’s downward turn Following this downturn, Binance—the largest crypto was anticipated, as it began over the weekend. It has exchange in the world—decided to pause Bitcoin been evident for some time that external economic withdrawals because of a backlog issue. They said that this factors were influencing the crypto market. Investors would not impact other cryptocurrencies—only Bitcoin. have recently been intimidated by high inflation and Consequently, Bitcoin dropped nearly 14% to a low of interest rate hikes. Last week, the US Labor around $20,300 for the first time since the end of 2020. Department released a report which showed that This catalysed a drop in the world’s second-largest token, annual inflation increased to 8.6% in May. This is the Ether, which ultimately led to more cryptocurrencies biggest 12-month increase in prices the country has losing their value. seen in over 4 decades. Crypto investors were thus left with a feeling of unease. The challenging environment also caused BlockFi, a well- known crypto firm backed by Peter Thiel, to let go of 20% Now, questions are circulating within the industry of the company’s employees. about how reliable crypto platforms like Celsius are. They promise high (and often unrealistic) yields to Experts in the field are warning that the selloff will their customers, but after so many high-profile crypto continue, which will in turn put more selling pressure on collapses, it is apparent that investors cannot rely on stocks. Some argue that crypto has no real-world utility the crypto market to stabilise. and this implosion was inevitable. Therefore, it would be near impossible to predict if or when it will bottom out. As This recent crypto crash came days after Alex fears of a recession loom, these experts say this is a sign Mashinsky, Celsius CEO, accused those who have that the markets are experiencing a risk-averse sentiment criticised his company of spreading what is known in amongst investors who are now flocking to safer options. the crypto world as “FUD”, meaning fear, uncertainty, This means that the stock market may suffer the and doubt. repercussions of the crypto world. Celsius is just one of the many exchanges that have Crypto investors will have even more reason to be fearful if raised millions in funding, as well as borrowed large the price of Bitcoin falls below $20,000. sums of money from other companies. As investors continued to sell their riskier assets on To protect your assets, it is important to seek Monday, the S&P 500 fell into bear territory. Bear markets, professional advice during periods of uncertainty like though relatively rare, are when stocks drop a minimum of what the world is facing today with inflation and the 20% from their recent peak. They signal that investors hold cost-of-living crisis. Contact us today to schedule a a pessimistic outlook on the economy. The last bear market free consultation with one of our Wealth Managers. was in 2020 when the coronavirus was first spreading. The recovery then was speedy. Before that, the last major bear market was from 2007 to 2008 when the housing market collapsed.