- The dreaded “crypto winter” has already wiped out 72 percent of the market value of cryptocurrencies.
- Three Arrows Capital had defaulted on some of its loans in recent days, but things got worse.
- The price of Bitcoin crossed the floor of 19 thousand dollars again and they fear another collapse that will take it below 14 thousand.
Cryptocurrency-focused hedge fund Three Arrows Capital, known as 3AC, was fatally hit by the Terra USD stablecoin crash a couple of months ago.
That, added to the consequent fall in the price of Bitcoin, ended up liquidating the fund that now threatens to further affect the reality of the market in general.
Three Arrows Capital is the most relevant victim of “crypto winter” which started a few months ago and has now deepened, with the value of Bitcoin falling back below $20K.
This Thursday, June 30, it even crossed the floor of 19 thousand dollars and analysts They warn that it could fall to 14 thousand.
In relation to Three Arrows Capital, CNBC reports that Teneo, an expert in companies facing bankruptcy difficulties, has been brought on board to lead the liquidation process.
Teneo, in particular, is looking at 3AC’s finances to see its balance sheet and see if some of the investor funds can be salvaged.
Three Arrows Capitalfounded by Zhu Su and Kyle Davies, is one of the largest cryptocurrency hedge funds in the world, hence the complexity of what is happening.
Its fall can infect the entire market and cause it to collapse even more.
The 3AC fund was known for its highly “leveraged” bets (made with borrowed cash), hence the precipitous drop in the price of Bitcoin had a lethal impact on its structure.
3AC’s liquidity problem is serious and ended up exploding when this Monday, June 27, it defaulted on a Voyager Digital loan consisting of more than US$300 million in the USDC stablecoin.
He also did not pay 15,200 bitcoin worth approximately $305 million.
Total, the unpaid debt in less than four days amounts to more than US$660 million.
Three Arrows Capital, in trouble for the price of bitcoin
The hedge fund was heavily exposed to the Terra USD stablecoin and its Luna collateral. Both tokens starred in one of the most important failures of the crypto ecosystem of the year, when Terra USD lost parity with the US currency and panic gripped the market.
A few days after the crash, two US crypto lenders, Block Fi and Genesis, liquidated Three Arrows Capital’s positions, accelerating the hedge fund’s collapse.
According to the financial media, 3AC could not face the so-called “margin call”, which occurs when an investor must respond with more cash to cover the loss of an investment made with borrowed funds.
The so-called “crypto winter” has already generated a collapse of more than 70 percent of the sector since the peak of November last year. Now, the market cap of cryptocurrencies is no more than $895 billion.
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