As cryptocurrencies crash, some blockchain projects may struggle to survive

Crypto in no time

Bitcoin BTCUSD,
+4.55%
lost 4.9% in the last seven days, trading at around $ 20,497 on Thursday, according to CoinDesk data. Ether ETHUSD,
+10.83%
fell 9% over the seven-day stretch to around $ 1,174. Meme token Dogecoin DOGEUSD,
+3.06%
withdrew 12.5% ​​while another dog-themed token, Shiba Inu SHIBUSD,
3.42,
traded 9.6% lower from seven days ago.

Cryptometry

Tiresome protocols

Following the crash of cryptocurrencies, some digital asset protocols may face increasing problems in continuing operations as their treasuries shrink, according to Meltem Demirors, head of strategy at CoinShares.

“The problem with many protocols is that their treasury is largely [denominated] in their own tokens, “said the Demirors.” If you look at any of these protocols, their tokens are down 90% to 95%. Maybe two months ago they had four years of runway, they now have four months of runway. “

It adds to the pressure of the protocols that smaller coins usually have limited liquidity. The protocols “could not sell [them] even if they wanted to, ”Demirors remarked.

“If we look at the liquidity of these trading pairs, the slips on some of these assets, even in the top 100, are extremely low. Selling tokens for $ 100,000 or $ 200,000 will cause the price to go down 5% to 10%. Then this type creates this recursive effect, “according to Demirors.

Meanwhile, it is still difficult to measure the contagion from the bankruptcy of Three Arrows, Celsius and Voyage and to know how it will affect many blockchain projects, Demirors noted.

“There were a number of market makers, lenders and desks you could go to early this year, who would lend to your security, would market-make with low liquidity, have withdrawn their loan books and no longer engage in these activities. there just are not that many loans available, ”Demirors said.

Tarun Gupta, CEO of Coinshift, said that many crypto projects are not well enough equipped for market downturns when it comes to financial management. Things worked well during the beef market, but “since sales started and many people simultaneously wanted to take back their positions, there was no preparation,” Gupta said.

“I would say that the best solution going forward is definitely to have a certain type of revision for these very large protocols, such as what will happen to the investors when the worst case comes and how that protocol behaves. No one does any kind of simulation. None do some kind of testing for that scenario, “Gupta noted.

Celsius bankruptcy

Fighting cryptocurrency lender Celsius Networks filed for Chapter 11 bankruptcy protection on Wednesday, about a month after it suspended all user withdrawals, citing “extreme market conditions.”

In a statement, the company’s co-founder and CEO Alex Mashinsky said the filing with the US Bankruptcy Court for the Southern District of New York “is the right decision for society and our company.” “I am convinced that when we look back at Celsius’ history, we will see this as a crucial moment, where acting with determination and confidence served society and strengthened the future of the company,” he said.

Celsius said they have $ 167 million in cash on hand, which will provide liquidity as it continues to operate during the restructuring process. MarketWatch’s Mike Murphy wrote more about it here.

In fact, as Celsius and another crypto company Voyager filed for bankruptcy, some customers have lost confidence in almost all centralized platforms. Read my story here.

Crypto companies, funds

Shares of Coinbase Global Inc. COIN,
+0.60%
increased 2.2% to $ 54.25 on Thursday, and they were down 5.7% over the last five trading sessions. Michael Saylors Microstrategy Inc.
MSTR,
+4.62%
rose 2.9% on Thursday to $ 201.19, down 8.4% in the last five days.

Mining company Riot Blockchain Inc. RIOT,
+7.91%
Shares rose 6.1% to $ 5.23 on Thursday, down 0.9% over the past five days. Shares of Marathon Digital Holdings Inc.
MARA,
+3.09%
rose 2.6% to $ 7.98, up 12.9% in the last five days. Another miner, Ebang International Holdings Inc. EBON,
+7.26%
Shares rose 3% to $ 0.53 on Thursday, while they were down 4.8% over the past five days.

Overstock.com Inc.
OSTK,
-1.48%‘s
the stock rose 0.3% to $ 28.87. The shares lost 9.9% during the five increased period.

Shares of Block Inc.
SQ,
-2.70%,
formerly known as Square, lost 1.8% to $ 62.99, contributing to a loss of 8.3% for the week. Tesla Inc. TSLA,
+0.54%
the stock fell 0.6% to $ 706.82, while it was down 3.6% over the last five sessions.

PayPal Holdings Inc.
PYPL,
-2.54%
fell 2% to $ 29.91 and was down 6.8% over five sessions. Nvidia Corp.
NVDA,
+1.37%
the stock rose 1.6% to $ 154.06, looking at a loss of 2.8% over the last five trading days.

Advanced Micro Devices Inc.
AMD,
+1.39%
Shares rose 1.8% to $ 78.93 on Thursday, down 0.4% from five trading days ago.

Among cryptocurrencies, ProShares Bitcoin Strategy ETF
BITO,
+5.20%
was up 5.3% to $ 12.76 on Thursday, while its Short Bitcoin Strategy ETF
BITI,
-5.24%
fell 5.2% to $ 39.10. Valkyrie Bitcoin Strategy ETF
BTF,
+5.16%
increased 5.4% to $ 7.97, while VanEck Bitcoin Strategy ETF
XBTF,
+4.92%
jumped 5.3% to $ 20.12.

Grayscale Bitcoin Trust
GBTC,
+ 5.80%
rose 7% to $ 13.47.

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