An unprecedented crisis of confidence has affected the crypto industry for several months.
To measure it, just consider the prices of cryptocurrencies, which are often attached to a platform or a project. The cryptocurrency market has lost $2 trillion in value since hitting an all-time high of $3 trillion in early November, according to data firm CoinGecko. Prices for bitcoin, the king of cryptocurrencies, are down more than two-thirds since hitting an all-time high of $69,044.77 on November 10.
The severity of the crisis intensified earlier this spring with a seemingly contained event. Early in May, sister coins Luna and UST or TerraUSD collapsed. The fall of the two digital currencies was caused by the fact that many investors wanted to liquidate their positions at the same time. At least $55 billion was wiped out in this disaster.
The Collapse of Luna
What may have appeared as an isolated event finally revealed itself as an octopus with multiple ramifications. A month later, the crypto lender Celsius Network, which operates like a bank, announced that it was suspending withdrawals, thus preventing its customers from having access to their money. A few days later, Three Arrows Capital, or 3AC, a Singapore-based hedge fund, said that it was taken aback by the rout of Luna, a digital currency in which the firm had exposure of more than $200 million.
Voyager Digital,…
