The crypto investing front has taken another barrage of body blows, pushing Bitcoin to test the $19,000 per coin level once again. Since the November 2021 peaks, this decentralized digital currency is down -75%.
As investor fears over inflation turning to a recession are coming to fruition, riskier assets tend to be the first to be unloaded in a portfolio.
Major cryptocurrency hedge fund Three Arrows Capital, also known as 3AC, has fallen into a more forced version of this liquidation mode. Being one of the most prominent crypto hedge funds, Three Arrows has been known for their highly leverage bullish bets on bitcoin. People known with the matter have stated they have hired third parties to help unwind some positions to meet outstanding margin calls.
The June expiry Bitcoin futures contract (BTCN22) is currently trading -970 at 19,215.
This recent slump in digital currencies has seen billions of dollars lost in the market in just a few weeks.
Other companies have also faced pressure from this whiplash. Lending firm Celsius and crypto exchange Coinflex have frozen withdrawals due to market conditions while Coinflex is currently defaulting on customer debt.
The second largest digital currency in the world, Ethereum, is also under water. From the 52-week high of $4,865.42 the coin is down -78%.
The country of El Salvador is also struggling with their $425 million experimental investment in cryptocurrency adoption. The original goal was to launch their economy in a positive trajectory with early adoption of the crypto space, but it has unfortunately done just the opposite. With bitcoin losing over half of its value since, the country now may miss its more than $1 billion in loan payments coming due next year.
Grayscale Investments, one of the world’s largest digital asset managers, is suing the SEC for rejecting their bitcoin ETF application. Most of their investments may seem like ETF securities already, like symbol GBTC, but are listed as trusts. This conversion would allow them to be listed on the NYSE.