Yingwei Finance Investing.com – Since the beginning of this year, the tragic and solemnity of the cryptocurrency market can be described as “hearing sadness and listening to tears”. The market value of the market has dropped to about 900 billion US dollars, which has evaporated more than 2 trillion US dollars since the beginning of the year. Among them, Bitcoin (), which accounts for the largest proportion, has fallen by 56.13%, 98.31%, and 59.30%.
The slump in the cryptocurrency market has triggered a series of negative reactions involving all aspects of the industry, and has even been likened by some media to the “Lehman Crisis” of the 2008 financial crisis.
In a series of chain reactions, those companies that hold more cryptocurrencies are naturally the first to bear the brunt.
For example, MicroStrategy Inc (NASDAQ: ), the world’s largest bitcoin holding company, was expected to report an impairment loss of up to $3.4 billion in the second quarter. Because the data shows that the value of bitcoin held by the company as of the end of the first quarter was about 5.9 billion US dollars, and based on the closing price of US $ 18,900 on the last trading day of the second quarter, the value of the company’s bitcoin holdings may shrink by 58% or so, to $2.45 billion. The company’s shares have also fallen by nearly 70% this year.
Another well-known Wall Street company investing in cryptocurrencies is Tesla (NASDAQ: ). As of the first quarter, Tesla’s bitcoin holdings were worth about $1.2 billion. After the corresponding decline (58%), the company’s bitcoin investment may be devalued at about $440 million. For the richest man, Musk, this may be Not much, but for Tesla, it was equivalent to about 9% of the company’s full-year profit last year. The stock is still down 35.48% this year.
The latest news this week also shows that Meitu (HK: ) is also currently mired in bitcoin’s losses. The company’s announcement shows that it expects to post a net loss of $275-$350 million in the first half of the year, still largely due to impairments on cryptocurrencies that have been purchased. The company bought a total of 31,000 ethereum and 940.89 bitcoins in March and April last year, at a cost of $50.5 million and $49.5 million, respectively, at a cost of $1,629 and $52,610. The stock is down 40% this year.
In the past ten years, Bitcoin has indeed experienced two major crises, one of which was in 2018, when Bitcoin plunged by more than 80%, and then rebounded to a high of $69,000 in November 2021. As such, crypto-devoted believers firmly believe that it will only be a matter of time before Bitcoin recovers.
According to a survey conducted by Morning Consult, a well-known American consulting firm, among the 4,400 respondents, some staunch believers said they would go all out to prepare for hibernation and welcome the winter of cryptocurrencies. According to the survey, 28% of bitcoin holders said they had purchased bitcoin in the past month, while 71% of respondents said they intend to buy bitcoin.
However, it is worth noting that this survey also shows that although investors’ confidence in the market has not been extinguished, their trust in cryptocurrency trading platforms has been greatly reduced. Morning Consult said that the main reason is that these platforms are too young, have not established long-term relationships with investors, and do not fully trust each other.
And investors’ distrust is justifiable.
Previously, the collapse of the cryptocurrency Luna triggered a series of negative reactions, and the algorithmic stablecoin TerraUST also collapsed in this context, tens of billions of dollars in value evaporated, and the cryptocurrency market fell further.
Subsequently, the Celsius Network cryptocurrency lending giant, which has 1.7 million users, halted all customer withdrawals, swaps and transfers. The news shows that the institution has withdrawn its liquidity twice at the end of last month, and has hired professional institutions to prepare for the potential bankruptcy.
Then, Three Arrows Capital, a hedge fund focused on the cryptocurrency market, also fell into bankruptcy liquidation. It is one of the largest hedge funds in the market, with funds under management at one point reaching $10 billion, with a portfolio that includes tokens such as Avalanche, Solana, Polkadot and Terra. The liquidation of the “top stream” that played an important role in the industry has exacerbated the crisis in this market.
And because Three Arrows Capital had borrowed $675 million from Canadian cryptocurrency broker Voyager Digital in the form of 15,250 bitcoins and $350 million in USD Coins. Subsequently, Voyager Digital Canada Ltd (TSX: ) also announced on Friday that it would suspend trading, deposits, withdrawals and loyalty rewards as it continues to explore strategic options with interested parties. As a result, the company’s stock price fell as much as 43% in a single day in the U.S. over-the-counter market, and this year, the stock has fallen more than 90% in Canada, the main listing place.
Coincidentally, Voyager’s competitor, the cryptocurrency lending platform BlockFi, has also encountered the threat of liquidity depletion recently and has planned to sell itself on the cryptocurrency exchange FTX for $240 million. The latest news is that on Monday, another cryptocurrency lending company, Vauld, also announced that it will suspend withdrawals and explore potential restructuring plans.
The collapse of cryptocurrencies is like the collapse of a domino, and a series of negative reactions may not be over yet. What the market is paying close attention to now is, where will the next “explosion point” of this crisis be?
Some analysts pointed out that the stable currency Tether will be the next key, because in the past month, the bears have increased their bets on the pair, and the market value of the currency fell by $600 million last week, which is higher than TerraUST. Before the explosion, the market value had been wiped by 17 billion US dollars.
Why is Tether so important? The so-called “stable currency” is a cryptocurrency whose market value is linked to “stable” reserve assets such as the US dollar or gold, and serves as a pricing anchor and a medium of exchange in the cryptocurrency market. Tether Limited is the largest operator in the stablecoin field worth $180 billion, and plays a key role in facilitating transactions across the entire cryptocurrency market. It also provides connections to the mainstream financial system, equivalent to the currency circle financial infrastructure.
Tether can be said to be a “load-bearing wall” in the entire cryptocurrency market, so its future trend will be crucial.
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