The culprit crypto deleveraging that had caused the bloodbath in the crypto market has come to an end. Such an event means we could soon brace for days ahead. After this news came, BTC, ETH and SOL have all pushed to recovery mode.
JP Morgan’s strategist Nikolaos Panigirtzoglou says “ increased willingness from the crypto fraternity to bailout distressed entities has skyrocketed. This is a healthy indicator and venture capitalists may move at a healthy pace after citing this.”
What The Fraternity is Doing To Counter Deleveraging?
3ACs and Celsius Network collapse triggered by crypto deleveraging . Investors either sold off the assets or much of the position got liquidated due to Terra’s collapse. Hence, creating negative sentiments for the crypto market.
A community backed ecosystem, where the community itself sucked the blood out of protocol through crypto deleveraging raised serious questions on the sustainability of the ecosystem. Sam Bankman-Fried, the owner of FTX exchange, took that as an opportunity and decided to bail out these ventures. FTX has already decided to buy BlockFi crypto lending platform for $25 million. But BlockFi CEO says in his June 30th tweet that such news are just speculations.
Crypto leveraging isn’t new and some of the high profile companies have already taken the lead. Microstrategy for example has unrealized $1 billion in losses. Despite that, the company is able to hold still. However, when small companies do a 5x to 10x leverage without necessary capital, they simply burnout in the process. That’s the reason that even VCs have turned cautious not to get fooled this time by the FOMO in the market.