Bitcoin and the crypto markets are currently facing increased volatility, ie strong price fluctuations. The crash last week was followed by a couple of green days where BTC and Altcoins could rise sharply – but analysts are not yet quite clear, on the contrary. Meanwhile, after the Terra LUNA crash, the next cryptodrama is shaking the industry: the collapse of the crypto fund Three Arrows Capital (3AC). Are the dominoes falling now?
So far, the next big correction in the crypto markets has not been missed: Bitcoin (BTC) is stable above $ 20,000 and only falls below it for a short time. Ethereum (ETH), the second most valuable cryptocurrency by market value, has also recovered after its recent retreat to around $ 900 and returned above the psychologically significant $ 1,000 mark. Right now, BTC is trading at $ 20,428, ETH at $ 1,101.
Why is bitcoin falling right now?
The total crypto market value has grown by 2% in the last 24 hours, it is now at 904 billion dollars. Some assets even perform really well in the current environment: the Layer 2 scaling solution Polygon (MATIC), for example, has increased by 27% in the last 24 hours, while the blockchain game project Enjin Coin has increased by 15%. Analysts warn, however: The downturn in the crypto markets is not over yet. “I just looked at a lot of charts and yes, everything still looks bearish to me. I expect new lows this week, ”commented the pseudonymous top trader CryptoCapo.
Have just checked a lot of charts and yes, everything still looks bearish to me. Expect new lows this week.
– il Capo Of Crypto (@CryptoCapo_) June 20, 2022
The expert is sure: Bitcoin will only rise again after further corrections. In his estimation, the local low in the BTC price is between $ 16,000 and $ 17,000. In other words, cryptocurrency number 1 can correct another 22% before the markets are ready for a trend reversal. Adding to the bearish momentum is another cryptodrama that is currently shaking the industry: the collapse of the crypto hedge fund and lender Three Arrows Capital (3AC). What happened?
Three Arrows Capital (3AC): The Next Cryptodrama
As feared, the brutal fall of altcoin Terra LUNA has a huge impact on the crypto markets. In particular, Singapore-based crypto hedge fund Three Arrows Capital (3AC) now appears to be feeling the effects. The crypto company had invested more than $ 200 million in Terra, and according to speculation, it could have been up to $ 450 million. Shortly after the Terra Luna crash, it became suspiciously quiet around the two founders Su Zhu and Kyle Davis. Unusual for crypto-influencers who are usually vocal and regularly speak out on Twitter. Meanwhile, it is clear that the Terra debacle has put Three Arrows Capital under such great pressure that the hedge fund is now also threatened with collapse.
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It’s been a week since CIO Zhus’ last tweet, he wrote: “We are in the process of communicating with stakeholders and are determined to resolve this issue.” Whether this determination alone is enough remains to be seen. Should 3AC actually be insolvent, additional so-called contagion effects are likely. Because: Many crypto companies are merged with the hedge fund – if the gear fails, the next one will no longer turn either. Or put another way: Bankruptcy spreads from one company to the next. The coming days, weeks and months in the crypto markets should therefore be exciting.