CNBC writes that Bitcoin has lost about 58 percent of its value this year, posting its worst quarterly performance since 2011.

Macroeconomic problems, such as rising interest rates and rampant inflation, have led to stock sell-off and trickled down to the cryptocurrency market. Another problem is facing the sector: a lack of liquidity that led to the liquidation of cryptocurrency hedge fund Three Arrows Capital and the temporary suspension of withdrawals by clients of credit firm Celsius. The quarter also saw the collapse of the algorithmic stabler Terra USD, which sent shockwaves through the industry.

About $1.2 trillion was wiped from the entire cryptocurrency market.

In this article, the news-cyber team wrote 5 events that hit the cryptocurrency industry last quarter.

1. Macroeconomic pressures.

During the quarter, the U.S. Federal Reserve held two steep interest rate hikes to combat rampant inflation. This raised fears of a recession in the U.S. and other countries and hit stocks, particularly fast-growing tech companies. Bitcoin is closely tied to the price movement of U.S. stock indexes, and the stock sell-off has affected it, and the entire cryptocurrency market as investors get rid of risky assets.

2. The collapse of Terra USD.

The collapse of the algorithmic stablecoin Terra and its subsidiary token Luna caused quite a shock to the industry. Stablecoin is a type of cryptocurrency usually tied to a real asset. Terra USD, or UST, was supposed to be pegged one-to-one to the U.S. dollar. Some stablecoins are backed by tangible assets such as fiat currency or government bonds. 

Still, the UST was driven by an algorithm and a complex system of burning and minting coins that failed. Terra USD lost its peg to the dollar, which, like a domino effect, led to the demise of the associated Luna token, which became worthless, and affected the entire industry with unpleasant side effects, primarily for the cryptocurrency hedge fund Three Arrows Capital, which had access to Terra USD.

3. Lender Celsius suspended withdrawals for clients in June

The company offered users a return of more than 18% if they deposited cryptocurrency into Celsius. It then lent that money to cryptocurrency players who were willing to pay a high rate to borrow the money. But falling cryptocurrency prices put this model into question, and Celsius cited extreme market conditions as the reason for the suspension of withdrawals. Celsius later said in a blog post that it was “taking important steps to preserve and protect assets and explore available options, which include making strategic deals as well as restructuring our liabilities, among other options.”

4. Liquidation of Three Arrows Capital

Three Arrows Capital, one of the most famous hedge funds specializing in cryptocurrency investments, had a 10-year history, also known as 3AC, founded by Joo Soo and Kyle Davis, known for its bullish bets on the highly leveraged cryptocurrency market. 3AC faced the collapse of the Terra USD algorithmic Stablecoin and the Luna token. U.S. cryptocurrency lenders BlockFi and Genesis liquidated some positions of 3AC, which borrowed from BlockFi but failed to meet the margin requirement. 

A margin call is when an investor must invest more money to avoid a loss on a borrowed deal. 3AC then defaulted on a loan of over $660 million from Voyager Digital, and Three Arrows Capital became liquidated as a result.

5. CoinFlex and Bitcoin Jesus spat

Cryptocurrency exchange CoinFlex suspended customer withdrawals last month, citing “extreme market conditions” and a customer’s account going negative. The company said its client, Roger Wehr, a well-known crypto investor, owes the company $47 million. Wehr, nicknamed the “Bitcoin Jesus” for his evangelical views of the crypto industry in its early days, denies that he owes CoinFlex money. 

The exchange said that usually, an account that goes negative is liquidated, but there was an agreement between CoinFlex and Vere that did not allow this to happen. CoinFlex has issued a new token called Recovery Value USD, or RUUSD, to raise $47 million to resume withdrawals and is offering a 20 percent rate for investors willing to buy and hold the currency. The company is in talks with several distressed debt funds to accept the token and is also trying to recover funds from Vera.

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