From $67,627 a bitcoin in Nov 2021 to the recent fall in valuation to $19,040 in Jul 2022 speaks of extreme volatility and stress in the crypto market recently. Crypto valuation across boards is crashing down like a pack of cards. And in its fall, it is also pulling down some of the high-profile crypto investment firms. One such firm which is under severe distress is Singapore-based crypto hedge fund Three Arrows Capital (3AC).
The company now faces an order of liquidation from a British Virgin Islands court. Jean Pierre Vandome shares his insights on the developments and the prospect of liquidation of the firm.
The sharp sell-off of digital coins across the board is a predominant sign of how the market downturn is hurting the crypto industry at large. Jean Pierre Vandome says, “The crash is serving a severe blow to major crypto players and venture capitalists backing them. Three Arrow Capital’s distress is only visible now because the company has burnout its last threshold in an intermittent yet sustained fall over the last six months. The company was staking too much with a strategy of playing bullish crypto bets at high leverage. I think the investors at the firm were too naive or over-ambitious in risk-reward assessment.”
Jean Pierre Vandome shares, “Voyager Digital, a listed crypto broker and a lender to Three Arrows Capital, had issued a default notice last week following 3AC’s failure to repay on its loan of 15,250 BTC ($324 million approx.) and $350 million USDC. And this storm is not just hurting major investors, but also looped in major crypto lenders and sending panic wave across the crypto lending market.” BlockFi, a crypto lender, already announced a loss of $ 80 million from its dealing with 3AC, pushing it to seek an acquisition offer recently. “3AC’s filing for bankruptcy in New York is an attempt to protect its assets in the US from being pulled up in the liquidation process in the Virgin Islands. This ultimately seals off any chance of solvency for 3AC.”
A blockchain and crypto investor in his own right, Jean Pierre Vandome is very positive about the future of blockchain technology.
Notwithstanding the crypto distress at the moment, the crisis can be a signal of the necessary correction. The alarm this liquidation has sent across the board will provide for a more modified and calibrated strategy for balanced growth in the crypto market.
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