Kanawat TH
2022 was one of the most disastrous years for the cryptocurrency ecosystem, with major tokens like Bitcoin (BTC-USD) and Ethereum (ETH-USD) erasing huge multi-year gains amid industry-wide pain.
Seeking Alpha summed up the year in the following timeline with the collapses of formerly prominent crypto-related firms. Some of the companies suffered from a liquidity squeeze triggered by the sudden Bitcoin collapse (BTC USD) and other coins.
July:
Crypto hedge fund Three Arrows Capital, also known as 3AC, filed for bankruptcy protection as the fall in digital asset prices, partly sparked by the abrupt demise of the Terra blockchain (LUNC-USD) (UST-USD) a month earlier, this led to a series of outsized margin calls from lenders that it was unable to meet.
Bitcoin (BTC-USD) fell 39.4% from early May to late July and landed just under $23,000.
Shortly thereafter, Voyager Digital (OTCPK:VYGVQ) filed for Chapter 11 bankruptcy, allowing a company to restructure its debt while continuing to operate, a week after the crypto lender suspended customer deposits and withdrawals amid a broader liquidity crisis . The move came notably after 3AC defaulted on a loan of over $660 million from the company.
Celsius Network, another crypto lender, followed suit when it filed for Chapter 11, listing assets ranging from $1 billion to $10 billion and more than 100,000 creditors. The company paused withdrawals, swaps and transfers from the network for nearly a month before seeking relief amid turbulent market conditions.
Singapore-based crypto exchange Zipmex rounded out the decline in crypto firms for the month. It filed applications under Section 64 of Singapore’s Bankruptcy, Restructuring and Winding Up Act after blocking customer withdrawals.
September:
Compute North, formerly known as one of the largest data center hosting providers, filed for Chapter 11 late in the month as the bear market continued to take its toll on the industry. Notably, the company was the primary hosting provider of Bitcoin (BTC-USD) miner Marathon Digital (MARA).
Bitcoin (BTC-USD) cratered between late July and late September. 16.7%which ends at around $19.3k.
November:
Just as some market participants began to call for a crypto comeback, the industry suffered another major blow: the collapse of Sam Bankman-Frieds FTX (FTT-USD), which at one point was the second largest crypto exchange valued at $32 billion was. The disgraced FTX founder, who faces criminal charges in the US, resigned from his CEO role when his empire filed for Chapter 11.
The fallout from FTX rippled through the crypto ecosystem, prompting crypto lender BlockFi to also file for Chapter 11 due to its exposure to the centralized trading platform. BlockFi was forced to suspend customer withdrawals earlier in the month due to uncertainty about the status of FTX at the time.
Bitcoin fell to $16.9K in late November, a plunge from 11.7% from the end of September.
December:
Recently troubled Core Scientific (CORZ), one of the largest publicly traded Bitcoin (BTC-USD) producers, filed for Chapter 11 as the market downturn continues to weigh on the industry. It’s not a meltdown, however, as the company expects to enlist support from some of its existing convertible debenture holders in a reorganization. CORZ started trading at around $10 a share on April 8, only to fall to $0.12 on Friday.
Bitcoin (BTC-USD) changed hands at 15:38 ET Friday, down at $16.8K 65% from a year ago.
Seeking Alpha contributor Nathan Aisenstadt has given Bitcoin (BTC-USD) a sell rating, arguing that the Federal Reserve’s hawkish stance is “reducing the token’s investment appeal.”
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