2022 has not been a great year for cryptocurrency exchanges and firms. Approximately 10 crypto firms have suspended withdrawals since the beginning of the year, and several have had to file for bankruptcy protection.
The crypto market has been recording huge capital outflows which further eroded the enormous gains made over the past weeks. Witnessing huge selling pressure, Bitcoin (BTC) too, is facing a battle to hold its price above the $20,000 mark.
Now, a warning has been issued by a famous crypto analyst about the possibility of the onset of a domino-style effect. This would be similar to the 2008 market crash as this time too, the market is facing a downward momentum.
The market lost $70 billion in a single day owing to the drop in the most valuable crypto asset that is Bitcoin. On August 19, Evening Standard reported that the crypto industry could go through a domino effect just like the financial market went in 2008.
As per Lennix Lai, the Director of Financial Markets at OKX, the world’s second-largest crypto exchange by spot trading volume,
“The domino effect we’re seeing among crypto firms is akin to the 2008 financial crash among Wall Street firms. “
The 2008 Crash
Since Bitcoin plunged, 10 crypto firms including terra
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(LUNA) and lending firms like celsius network
Lending & Borrowing
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(CEL) collapsed and halted all withdrawals amid the market crash.
This happened in 2008 too. Several Wall Street Companies buckled under pressure as the Housing Market was hit and borrowers were not able to pay off their loans.
“Both cases resulted from institutions taking an illogical risk, largely at the expense of investors.”
As the market has lost $70 billion in a single day, leading cryptocurrency trading expert Michaël van de Poppe opined that the market cap is facing rejection at a critical resistance level.
Market participants’ hopes of a crypto rally are now severely dented. Despite a weak first half of 2022, it appears like there shall be no relief in the second half either. People are losing faith in the crypto industry with the crashes, chaos, illegal activities, and increasing regulations.