The cryptocurrency market has been affected pretty badly by fears that the interest rate hike will end the era of cheap lending. Bitcoin, which is the leading digital asset, is already down by almost 56% from its all times high. Furthermore, a lot of crypto firms have gone bankrupt or are looking for capital infusions.
Three Arrows Capital (Hedge Fund) Went Bankrupt
Three Arrows Capital (Hedgefund) which is based in Singapore, filed for bankruptcy last month. Back in the day, this crypto hedgefund was a major player in the crypto market. However, many contribute to this downfall of the crypto hedge fund through excessive exposure to the Terra ecosystem.
The fall of TerraUSD (stablecoin) ended up bringing the entire Terra ecosystem down with it. As a result, almost $500 billion was removed from the market cap of the crypto market. And any companies that had exposure to this stablecoin also had to weather the ill effects.
3AC was highly leveraged at the time, which further intensified the problem. As a result of the fall of TerraUSD, the company failed to meet its margin calls.
Furthermore, the crypto companies such as Genesis Trading and BlockFi also liquidated all of their positions with the 3AC. In fact, the court file data suggests that the creditors are owned around $2.8 billion by the hedge fund.
Celsius Network Also Facing Problems
Celsius (crypto lender) based in New Jersey (USA) also suspended the withdrawals for the consumers in June. A month later, the company also filed for bankruptcy as it was unable to meet its financial obligations.
Overall, the company was facing a deficit of $1.19 billion on its financial balance sheets. In a recent funding round, the company was estimated to be around $3.25 billion by experts.
Many experts believe that the current situation in the crypto market may shake several other crypto firms as well. If this happens, the bearish run in the cryptocurrencies and digital assets will further intensify!