Bitcoin drops to levels last seen in December 2020

FIFI PETERS: A pretty brutal day for stock markets, but an even more brutal day for Bitcoin. The cryptocurrency crashed over 17%. In fact, it was 12% at the time of writing, but the day got worse for it. I suppose that even extends the losses that were wiped out from the crypto market to beyond $200 billion.

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But let’s get the take of Sean Sanders, the CEO of Revix. Sean, we need to stop meeting like this. Every time you come on the show, it’s bad news for your world.

SEAN SANDERS: Yeah. I don’t know what to say. It might be just our conversations. Good evening. How are you doing?

FIFI PETERS: Good evening. I’m great. I don’t think you are though. Tell us what’s behind the latest – is it a crash, or is that overstated in the crypto market right now given the fact that, yes, we are seeing big losses across stock markets, but not to the quantum that Bitcoin and other cryptos are registering. What’s going on?

SEAN SANDERS: Well, over the weekend you had news develop about Celsius. Celsius is essentially one of the top 10 crypto platforms globally. It’s probably the second-largest lending platform within the crypto space, and they’ve halted all of their withdrawals. So that’ll send ripples throughout the entire cryptocurrency ecosystem. It has been a brutal period.

Whether or not that is what’s been driving the decline may have been one of the factors, but you’ve seen Bitcoin down 15%-odd today, Ethereum down 17%. I’m looking at the seven-day price chart, and Ethereum’s down 33%, Bitcoin 23%.

So it has been a brutal, brutal period. You’ve seen the market cap – and that’s the total market cap of all cryptocurrencies – fall from a high of about $2.9 trillion all the way down, now below the trillion-dollar mark of R980 billion.

So to say that this has been a sell-off would be an understatement. This has been a brutal, brutal period to be in crypto.

What do you do, during this period? Well, if you’ve invested, you’ve got to sort of take a longer-term stance.

You can either choose to sell out now, which is what a lot of people are doing. We have seen within the South African space, and certainly internationally as well, a lot of investors choosing to cash out their cryptocurrency, and turning that into fiat currency and moving that out of the crypto sphere.

But this is sort of the opportunity. If you’re looking out way into the future and you believe that crypto actually has a place in your portfolio and a place in society, this is where bargains are made. Right?

FIFI PETERS: Maybe. If we circle back to your the reference to Celsius, that crypto-lending company, [which has] around 1.7 million customers who perhaps can’t get their money right now – you say that they’re the top 10 – what about the others? What could their halting of withdrawals, citing extreme market conditions, possibly mean for other crypto lenders? Are we expecting to see them follow the same course?

SEAN SANDERS: Well, there has always been this air around Celsius, where there’s been, I guess, strange dealings that have happened with the directors and some sort of senior management within that company.

There’s a lot of other crypto lenders out there. Nexo is another provider, and Blockfire. These other entities have got slightly different licensing arrangements. They’ve been quite outspoken about Celsius over the years. It’s always easy to say this in hindsight.

I must say as well that Celsius isn’t sort of down and out. They’ve halted withdrawals. That’s literally been announced this morning. They may very well come back.

But what does it mean for the rest of the market?

Certainly, when looking at crypto platforms and all the rest, there are a bunch of really top-class, top-quality platforms out there.

They do treat their customer funds just like a bank. They follow the right processes and all the rest. But I suppose these lenders in this space, the likes of Celsius, do essentially take more risk than your normal crypto exchange or crypto-investment platform. I think what’s happened here is Celsius seems to have been caught out.

FIFI PETERS: So just in terms of where to from here, I read a comment that in the previous bear markets Bitcoin had dropped around 80% from its last record high, and that currently it is down around 63% from its last all-time high, which was hit in November. This particular analyst said that we therefore could see much lower Bitcoin prices over the next month or two. I’d like to know your view on that – do you agree or disagree?

SEAN SANDERS: Well, I think if you look at the fear-and-greed index, which is used in all asset classes but really used within crypto given that sentiment is such a big driver of the market, you’re sitting at the lowest levels that you can possibly get. At the moment 11 out of a 100 [is] extreme fear. So could we go lower? Yeah, we definitely, definitely could. If you saw the number of liquidations that happened within the crypto space just earlier today, they hit a new record as well.

So there has been a lot of blood on the street, as they would say. And yeah, the crypto market could definitely, definitely drop lower. Is that my base case? I have said this on the show before: I actually don’t know and I don’t pretend to be able to guess what’s going to happen in the crypto market over the next few months.

I think when you look out over the much longer term, that’s essentially why I’ve chosen to build the business in this space, because that’s what excites me. But I think over the short term sentiment’s definitely pointing negative. I don’t see there being a higher probability of upside relative to downside.

FIFI PETERS: It’s really, really negative at this stage. Sean, we’ll leave it there for now. Thanks for the honesty, [for] not pretending to know it all. It’s refreshing.

Sean Sanders is the CEO of Revix.