Market Cap Halved Compared to Pre-Luna Crisis
Crypto Investment Hedge Fund Bankruptcy
Financial Platform 'Celsius' Preparing for Bankruptcy
[Asia Economy Reporter Myunghwan Lee] It has been about 50 days since the crash of TerraClassicUSD (UST) and LunaClassic, but the impact on the cryptocurrency market is still ongoing. While a cryptocurrency investment fund is facing a default crisis, a cryptocurrency financial platform is reportedly preparing for bankruptcy. The Luna incident has led to opinions that the cryptocurrency market is now unpredictable.
According to CoinGecko, a global cryptocurrency market tracking site, as of the 29th, the total market capitalization of all cryptocurrencies was $946.9 billion (approximately 1,232 trillion KRW). This is half of the market cap of $1.9013 trillion (approximately 2,473 trillion KRW) recorded on the 5th of last month, before the Luna incident fully unfolded. Compared to last year, the contraction of the cryptocurrency market is also notable. According to the Bank of Korea's 2022 first half Financial Stability Report, the cryptocurrency market cap as of the end of last month was $1.3715 trillion, which is about a 41% decrease compared to the end of last year.
The contraction of the overall cryptocurrency market caused by the Luna crash appears to be affecting related industries as well. According to the U.S. economic media CNBC, the cryptocurrency investment hedge fund Three Arrows Capital (3AC) went bankrupt after failing to repay a $670 million loan. 3AC reportedly experienced liquidity problems following the Luna incident. Cryptocurrency financial platform Celsius also halted customer withdrawals and is reportedly preparing for bankruptcy as the cryptocurrency market entered a downturn.
The aftermath of the Luna incident seems to continue affecting investors as well. The parents of Jo Yuna, who was found dead at sea near Wando the day before, were reported to have searched for Luna coin on a portal site just before her disappearance. According to acquaintances, they had invested in cryptocurrency and suffered losses.
The Bank of Korea pointed out in its first half Financial Stability Report that "more than half of domestic cryptocurrency investors are young people aged 30 or younger," and warned that "the shock of investment losses due to the high volatility of cryptocurrencies may have a relatively large impact on the future income flow and consumption activities of the youth."
It is difficult to predict the additional impact the Luna incident will have on the cryptocurrency market. Professor Hong Ki-hoon of the Department of Business Administration at Hongik University said, "Although the cryptocurrency market is experiencing the aftermath of Luna, this case fundamentally made people aware that the cryptocurrency market is similar to a Ponzi scheme," adding, "If the desire to make money outweighs anxiety, the market could see a boom again."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
