Crypto Winter 2022: When Will the Crypto Crash End?
The crypto market peaked near $3 trillion last November, then abruptly reversed course as economic uncertainty led many investors to unload risky assets. That spark became a wildfire as the initial losses forced the liquidation of heavily leveraged crypto positions (investments funded with debt), which translated into even greater losses.
Unfortunately, risky bets were not limited to retail traders. Crypto lender Celsius often paid double-digit interest rates on Bitcoin (CRYPTO: BTC) and Ethereum deposits, then lent those assets to other entities to earn a return. In mid-June, Celsius froze withdrawals as the crypto market plunged, amplifying fear in an already unstable environment.
Additionally, the crypto industry is still feeling aftershocks from the collapse of the Terra blockchain, an event that erased $60 billion and left a once-esteemed ecosystem worthless. Crypto hedge Three Arrows Capital, which had invested heavily in Luna, was recently ordered to liquidate its assets after failing to repay loans. One of its creditors, crypto brokerage Voyager Digital, recently suspended trading and withdrawals due to liquidity problems fueled by Three Arrows' default.
Source Fool.com
