Crypto crash to get worse with deeper price drops as a multibillion-dollar hedge fund struggles to survive
The price of leading cryptocurrencies continued to plummet today, with industry experts warning that the “crypto winter” could last for years.
Bitcoin dropped about 3.87 per cent per cent today to $21,392.46 trade at $, while Ether fell 3.73% per cent to $1162.52. Bitcoin is now down near 70 per cent from it’s all-time high of $69,000 in November last year
The crash sparked speculation that crypto-focused multibillion-dollar hedge fund Three Arrows Capital might be insolvent as a result of the collapse.
As rumours swirled, Zhu Su, the co-founder of the Singapore-based fund, tweeted: “We are in the process of communicating with the relevant parties and fully committed to working this out.”
Industry experts warned of more bad news to come.
Steven McClurg, co-founder of digital asset investment firm Valkyrie Investments, told City PM that the price of bitcoin could drop to around $15,000 and stay there for two years, while a big sell-off in Ether could send it as low as $600 by the end of the summer.
McClurg said the Fed’s hawkish monetary policy tightening would cause greater volatility in the crypto markets. “It’s going to be Armageddon,” he said. “Nothing can recover until the Fed changes their rhetoric [on inflation]”.
Clem Chambers, chief executive of blockchain research and development company Online Blockchain, shared similar sentiments and blamed the Fed draining liquidity from the financial system for the crypto rout. He said that Bitcoin could potentially fall below $10,000, with the crypto winter lasting until 2024-2025.
Chambers told City PM that he also expected further “carnage” in the crypto jobs market, with further job cuts to follow. Coinbase said on Monday that it will cut 18 per cent of its workforce.
Both experts, however, expected Bitcoin to eventually recover. Chambers said the price of Bitcoin could reach $100,000 in four years, while McClurg said it could go up to $250,000 in five years