Market Overview for Organizations & Projects Facing Insolvency
Volatile is a word that sums up Bitcoin and cryptocurrency.
Cryptocurrency prices surge, only to plummet just as quickly as the market considers rumors, sentiment, and new substance developments. In just four days in early June, Bitcoin fell from $30,500 to about $23,500 — a 23% drop.
The Crypto Market Downturn
After a valuation of $1.6 billion in April for Luna, a digital currency linked to the so-called “stablecoin” Terra, investors recently saw Luna’s total market value fall to just $2,391.
Cryptocurrency investors who are relatively new to the space may be seeing lots of big red numbers at the moment due to the general decline in the market. If you’ve suffered significant losses as a result of these setbacks, it’s time to rethink your approach. Since November, the value of Ether, the ethereum blockchain’s cryptocurrency, has fallen by 59 percent. In addition to these, many other coins are worth noting.
Crypto Projects Heavily Hit by Market Setbacks
stETH and ether were trading at a one-to-one ratio prior to the Terra blockchain’s collapse last month. However, a price discrepancy of 2% to 3% appeared. In light of the financial troubles of crypto lender Celsius and hedge fund Three Arrows Capital — both major holders of stETH — the gap increased to 5–6 percent by the beginning of June.
According to the Kaiko report, Amber, a cryptocurrency investment platform, withdrew $160 million in just a few days in early June. StETH, a digital asset, was sold for $88 million by Alameda Research, a digital asset trading firm. About 400,000 ETH and stETH tokens were redeemed from the protocol in May by Three Arrows Capital, a hedge fund that is in danger of going bankrupt. It’s no surprise, then, that the Curve pool has lost 85 percent of its value and now only holds about 11% of its original value in Ethereum and 492 percent of its original value in stablecoin.
It’s possible that Celsius, a major crypto lender, is in over its head with its holdings of stETH after it halted withdrawals due to “extreme market conditions.” According to a data given by Ape Board, a portfolio tracker from the blockchain analysis firm Nansen, Celsius still holds at least 409,000 stETH, which is worth approximately $413 million at current prices. There is only about 110,000 ether in the stETH-ETH Curve pool, so there isn’t enough stETH to exchange. Celsius likely had to use an OTC-type transaction to remain financially viable, as they couldn’t sell their stETH on any centralized or decentralized exchanges.
Major Loss for Prominent Crypto Investors
In the wake of a recent market downturn, many cryptocurrency investors are reeling. Still, few have lost more than Michael Saylor, the tech CEO who has placed his company’s future in Bitcoin. According to Forbes estimates, Saylor’s net worth fell below $1 billion on Wednesday, down from $1.6 billion at the beginning of March. MicroStrategy stock and Bitcoin, two assets that have fallen in value during the recent market sell-off, make up the bulk of his net worth.
The market sell-off hasn’t just affected Saylor’s fortune. The value of Coinbase’s billionaire founders, Brian Armstrong and Fred Ehrsam, has plummeted 66% in the last month. In the wake of the recent market decline, some of crypto’s wealthiest billionaires have lost a substantial amount of money.
More than 60% of MicroStrategy’s share price has been lost in the last month, with the most recent decline of nearly 30%. Saylor co-founded MicroStrategy in 1989. Since late March, the value of Bitcoin, the world’s most popular cryptocurrency, has fallen by 38 percent.
Huge Loss for El Salvador
Even countries are not left out of the huge losses. Bitcoin adoption in El Salvador appears to have hit a rough patch recently. As of November 2021, Bitcoin was trading at $69,000 per coin. El Salvador, already amid a massive debt crisis, has been negatively impacted by the global fall in bitcoin prices. The value of the Central American country’s $105 million investment in 2,301 bitcoins has fallen by more than half to around $51 million. Nayib Bukele, the Republic of South Africa president, is a bitcoin enthusiast. According to Mr. Bukele, the country may purchase more bitcoin despite the massive downtrend.
Three Arrows Capital (3AC) facing insolvency
According to media reports, one of the largest crypto hedge funds, Three Arrows Capital (3AC), was purportedly liquidating its holdings after suffering huge losses on its investments. Messari.io’s analysis of 27 of 3AC’s investments shows that the crypto hedge fund has lost 60% of its investment this year. Bitcoin (BTC), Ethereum (ETH), and Avalanche (AAL) were among the assets (AVAX). Prior to the collapse of LUNA last month, according to reports, 3AC had also spent $559.6 million buying locked LUNA. The Defi Edge added, “It’s now worth around $670.”
We hope that the market will recover soon and the situation gets better.