May and June 2022 will be remembered as the time when the cryptocurrency market suffered one of the worst falls in its history. If there are many losers, the winners could appear in future innovative projects.

How to describe the collapse of cryptocurrencies? Far from its all-time high of nearly $ 67,000, bitcoin is now trading around $ 20,000. Total market capitalization, which approached $ 3 trillion, is now struggling to cross the $ 1 trillion mark, a symbol of a serious loss of confidence. Far from the more ambitious projections, which relied on an upward cycle for these assets, the failure of some projects highlighted the limitations of these new technologies and their inability to establish themselves as a safe haven.

At the origin of this incident, the Terra Luna affair. In a few days, the price of the Luna token has lost almost 100% of its value, falling from around 80 dollars to a few cents. The reason for this brutal fall is to be found in the other currency of the ecosystem, the Earth, a stablecoin. Stablecoins are meant to be non-volatile assets, with a token that must be worth a dollar to make the system work. Malheureusement, à la suite d’une liquidation massive de plusieurs portefeuilles et d’un algorithme défaillant, le stablecoin associé à la blockchain Terra n’a pu tenir le principe d’une pièce pour un dollar, entraînant dans sa chute le projet Luna tout entire.

Several investment funds close to bankruptcy

Until recently, Terra Luna was among the most followed and awaited projects of the entire ecosystem. Its failure put a huge brake on an already bogged down market. Since then, confidence no longer seems appropriate and investors have become much more cautious. In fact, a number of cryptocurrency investment funds held some of their cash in Terra Luna.

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This is the case of Three Arrow Capital, co-founded by Zhu Su, a cryptocurrency entrepreneur who has more than 560,000 followers on Twitter and who defended the thesis of a “cycle of super bulls”. The investment fund, which has managed more than $ 3 billion in assets, is now grappling with its various partner companies and facing bankruptcy.

Celsius Network, a cryptocurrency lending platform, is also having a tough time. While the company was still offering annual returns above 18% a few months ago, this promise proved impossible to deliver in the current environment. The company has since frozen all assets under its management, worth no less than $ 12 billion. The risk of bankruptcy of the American company could deal another devastating blow to the crypto ecosystem.

You could add to the long list of losers individuals who invested at the wrong time, after following the advice of the so-called cryptocurrency “experts” ready to sell the Moon to increase their view counter. But these significant turmoil could allow other players to do well.

A crypto-savior?

The founder of the FTX platform, Sam Bankman-Fried, tries to take on the role of “savior” of the ecosystem. By buying troubled companies and lending hundreds of millions of dollars to others, the FTX boss is expanding control of him. When he announced his partnership with a troubled company, BlockFi, the young billionaire explained on Twitter “take seriously our duty to protect the digital asset ecosystem and its consumers“.

Survivors of this incident could become future industry giants. Indeed, while the price of cryptocurrencies is plummeting, numerous projects continue to raise millions of dollars, such as FalconX, Magic Eden or the A16z investment fund. “As a bear market veteran, I can tell you there is no better time to build than now.“, Sidney Zhang, the technical director of Magic Eden, explained on Twitter.

Investors who become more cautious and less followers, projects on Web3 and blockchain may have the opportunity to develop in a healthier way, away from the opportunists. Ultimately, this crash could allow the entire ecosystem to solve technical problems and deliver innovation without the pressure of investors rushing to get a financial return. Can we believe in a new beginning?

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#Cryptocurrencies #winners #losers #crash

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