Is the Crypto Selloff Ending Soon?

After continued setbacks in the crypto sector, the market sentiment is getting to its weakest. This has been the state throughout this year thus far. 

The Woe of Three Arrows Capital Made it Worse

The collapse of Terra’s ecosystem in May was a huge blow. It dented the sentiment of investors and caused a wave of selloffs.

The dip that ensued in the crypto market affected both miners and retailers. The selloff has been more massive than was ever seen. Three Arrows Capital’s recent liquidation has only worsened the situation.

JP Morgan’s Nikolaos Panigirtzoglou gave a perspective on the recent collapse of the firm. He said Three Arrow Capital’s fall is indicative of a continuous fall in the market. Nevertheless, the crypto deleveraging that peaked might be coming to an end.

He said that the tremor of this year’s crypto fall still reverberates. This is most shown by the 3AC collapse. The deleveraging might, however, be coming to an end, The Insider quoted.

Is the Selloff Really Ending Soon?

According to Panigirtzoglou, there are signs that the market deleveraging has gone far ahead. He said indicators such as the net leverage show results in that direction.

Some crypto service firms are stepping in to help contain the market disaster. These are firms that have a far better balance sheet.  And their move is aiding the market ward off any more sharp disasters.

An example of such a financial bailout is FXT’s lending to BlockFi last month. The $250 million deal was stated by FXT CEO, Sam Bankman-Friend. It was a revolving credit facility aimed at boosting BlockFi’s liquidity.

Equally, venture capital is now flowing into the crypto industry rapidly. Venture capital has been an important source of capital funding for the sector. 

The capital momentum went up at a good rate in the months of May and June. The JP Morgan analyst put the figure at $5 billion.

In a period of three months, the Bitcoin price fell by as much as 58%. The coin went from $46,000 in May down to $17,774. The price of the king coin has caused a lot of traders to encounter havoc.

At the time of this report, Bitcoin sells for $19,454. It is down by 2.62% within the last 24 hours as CoinMarketCap reported.

The macro economy that is the major precursor of it all is yet to recover. The spillover from the war in Ukraine and COVID in China have the most effects. The high cost of energy is doing the most to crypto miners.

Since the existing state of affairs, one wonders if the end is really in sight. Nevertheless, the market should be optimistic.

Related Posts


Leave a Reply

Your email address will not be published.