• Mon. Oct 3rd, 2022

Analyst: ‘main market-native risk to crypto is contagion’

ByNdasi Tata

Jun 28, 2022
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1656363684253 d95e1647 7146 4b07 b4a4 477fe506ce8f

While Bitcoin (BTC) remains perched above $20,000 amid the crypto winter, digital asset market analyst Marcus Sotiriou says the main risk for the market is the contagion linked to the crypto hedge fund Three Arrows Capital (3AC) and crypto lender Celsius Network.

For 3AC, today’s notice of default from Voyager Digital all but confirms the demise of the hedge fund, whose problems go back to the collapse of cryptocurrency Terra Luna in May.

Multiple companies exposed to 3AC

Crypto brokerage Voyager’s exposure to 3AC is via a loan of over $675 million – in $350 million of USDC and 15,250 BTC. Three Arrows is unable to repay the loan and hence Voyager’s attempt to explore legal means of getting the funds repaid.

And it’s not just Voyager, the rot affects multiple crypto firms that have had exposure to the crypto hedge fund, whose not-so-good investment practices could see it sink with others. Sotiriou says the contagion could be deeper. This is what the crypto market currently faces.

As every major lender has been severely impacted by the demise of Three Arrows Capital, including BlockFi, Celsius, Voyager and Genesis, it is clear that the main market-native risk to crypto is contagion,” he said in emailed comments.

Together, these firms could see billions of dollars worth of investments go up in flames.

Notably, though, FTX founder and CEO, billionaire Sam Bankman-Fried is emerging as a ‘lender of last resort’ with his multiple bailout credit facilities. SBF noted last week that the key reason to help some of these firms is to “prevent contagion.” But he notes some may have to be left to die.

The post Analyst: ‘main market-native risk to crypto is contagion’ appeared first on CoinJournal.

Ndasi Tata

Ndasi Tata is a Cameroonian-born Bitcoin entrepreneur and former state journalist. He earned an M.Sc from the University of Nicosia in Cyprus in Blockchain and Digital Currency. He uses a variety of social media channels to promote his ideas and projects , and he's a major proponent of Bitcoin in Africa.

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