Warning About Cryptocurrency Market Released by Prominent Research Firm

1 year ago 77

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Arman Shirinyan

Already beaten up marketplace mightiness look different spike successful selling unit fueled by liquidity crisis

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The cryptocurrency marketplace has been going done a pugnacious year, but the things we mightiness look successful upcoming months oregon adjacent weeks could bring adjacent much symptom to a market that is barely functioning without caller inflows.

Digital Currency Group crisis

The bulk of marketplace participants astir apt heard astir the problems DCG faced aft the implosion of FTX and galore different firms. The liquidity situation led to the insolvency of 1 of its subsidiaries, Genesis.

Investors should wage attraction to the ongoing fiscal distress related to Digital Currency Group (DCG) arsenic the result could severely interaction crypto markets.

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— Arcane Research (@ArcaneResearch) January 4, 2023

After Genesis' problems became public, analysts raised an important question: what is going to hap with different subsidiaries of DCG, including Grayscale, which holds tremendous amounts of Bitcoin that would beryllium liquidated if the institution were as illiquid arsenic Genesis?

Warning

Digital Currency Group's bankruptcy would beryllium a catastrophe for markets, arsenic liquidation of their assets would pb to selling disconnected sizable positions successful GBTC and different Grayscale trusts. Sentiment among investors has deteriorated aft Cameron Winklevoss released an unfastened missive to Barry Silbert, stating that Genesis owes Gemini $900 million.

The missive did not uncover immoderate Gemini plans to spell aft Silbert if helium decides to disregard the highlighted matter. The champion result of the full concern would beryllium a coordinated solution betwixt some entities, which whitethorn see an involuntary petition for DCG filing for Chapter 11.

Companies tied to DCG were not doing well throughout 2022 considering the monolithic outflow of organization funds from the industry. The deficiency of liquidity could go the crushed down yet different clang of the market, but the adjacent clip we volition beryllium astatine hazard of reaching values astir retail investors volition not beryllium acceptable to header with.

At property time, the cryptocurrency market's capitalization is sitting astatine $800 billion, and Bitcoin is trading astatine astir $16,803.

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