LONDON - More than $2 trillion has been wiped from the overall cryptocurrency market in the seven months since it peaked last November, writes THE INDEPENDENT Thursday. This averages out at nearly $10 billion per day, with retail investors, corporations and even some countries all seeing their holdings blown away.
Just like the crypto crashes following all-time highs in 2013 and 2017, several leading companies in the space have also suffered potentially critical damage that could have ramifications for the entire industry.
Among the casualties is Celsius Network, a popular cryptocurrency lender that used the slogan “Unbank Yourself”. After freezing customer accounts last week, some fear that insolvency is unavoidable.
It is one of several platforms that appear to have been caught off guard by bitcoin’s monumental price drop, which saw the world’s most-traded cryptocurrency fall from close to $69,000 last year, to below $20,000 over the weekend. The fall led to forced liquidations of large leveraged bets, which in turn pushed the price lower and led to worries of it spiralling into a complete capitulation for the market.
The turmoil began last month when Terra’s UST stablecoin lost its peg to the dollar and caused its sister coin Luna to plummet by more than 99 per cent in value. The market instability that arose led to a broad sell-off, which ultimately led to Celsius’s issues, as well as those of fellow crypto lenders Babel Finance, crypto hedge fund Three Arrows, and just yesterday Hong Kong-based exchange Hoo.
Cryptocurrency news site CoinDesk has likened the current state of crisis to the 2007-08 financial crisis, warning that if the recent plummeting value of the Luna coin was crypto’s Bear Stearns moment, then the collapse of Celsius Network this week “threatens to become the industry’s Lehman Brothers” by serving as the failure that exacerbates a market crisis. But does that drastic comparison ring true?
