Written by Marcos Sotero, Analyst The UK Digital Asset Broker GlobalBlock
Global markets were dealt a catastrophic blow yesterday, like Nasdaq It is down 4.60% and the S&P 500 is down 3.88%. Crypto has suffered the most, with Bitcoin dropping more than 20% to $20,800. Since the crypto rally in November, in response to the launch of the Bitcoin ETF Futures product, crypto has been in an unforgiving downtrend with few signs of relief. Bitcoin has been closely correlated with the Nasdaq this year, and it actually did better until May. When UST and LUNA collapsed last month, which totaled about $100 billion, it started a downward spiral that exacerbated the cryptocurrency’s slide against the Nasdaq.
The market remains justifiably afraid of the potential effects of a degree becoming insolvent, while still having billions of assets under management. The decline in assets under management was notable, falling from $28 billion in November to about $3 billion today.
I suspect CelsiusLiquidity issues are raising serious concerns about high returns on many lending platforms, and crypto critics will feel more confident in their views on the legitimacy of DeFi. I agree that people should be careful with lending companies that offer lucrative double-digit returns on assets like Bitcoin and Ethereum. People should consider the risks involved such as smart contract exploits, bankruptcy of lenders, and whether the protocol has been stress tested. We are still in the early stage of encryption, many DeFi products are being tested and selectivity will cause many to fail along the way.
We are seeing effects across the board of central lenders, such as BlockFi He’s also having problems, too. They announced in a blog post today that they will be laying off 170-200 employees, which is 20% of the lender’s total staff.
This comes after a series of well-established crypto companies have been cutting staff numbers, due to the ongoing chaos of this market downturn. Crypto.com CEO Chris Marsalek said Friday that the company is laying off about 260 employees.
However, unfortunate events with lenders such as Celsius and other crypto firms will not deter savvy investors from investing directly in mainstream cryptocurrencies. The intrinsic value of limitless and unauthorized assets and blockchain will continue to thrive in the long run.
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