Justin Waiau offers a critical perspective on the liquidation of Three Arrow Capital
From $67,627 per bitcoin in November 2021 to the recent fall in valuation to $19,040 in July 2022, this speaks to extreme volatility and stress in the crypto market recently. Crypto valuation at all levels is collapsing like a deck of cards. And in its downfall, it also brings down some of the top crypto investment firms. One such company that is in deep trouble is the Singapore-based crypto hedge fund Three Arrows Capital (3AC).
The company is now facing a winding-up order from a court in the British Virgin Islands. Justin Waiau shares his perspective on the developments and the prospect of liquidation of the company.
The strong selling of digital coins across the board is a prominent sign of how the market downturn is hurting the crypto industry as a whole. Justin Waiau said: “The crash deals a severe blow to major crypto players and the venture capitalists who support them. Three Arrow Capital’s distress is only visible now because the company has exhausted its latest threshold in an intermittent but sustained decline over the past six months. The company was betting too much with a strategy of playing high leverage bullish crypto bets. I think the company’s investors were either too naïve or too ambitious in assessing the risks and rewards. »
Justin Waiau shares, “Voyager Digital, a listed crypto broker and lender to Three Arrows Capital, had issued a notice of default last week following 3AC’s default on its 15,250 BTC (approx. $324 million) loan. ) and $350 million USDC. And this storm is not only hurting major investors, it has also spread to major crypto lenders and is sending a wave of panic through the crypto lending market. BlockFi, a crypto lender, has already announced an $80 million loss from its deal with 3AC, prompting it to seek an acquisition offer recently. “3AC’s New York bankruptcy filing is an attempt to protect its assets in the United States from withdrawal from the liquidation process in the Virgin Islands. This ultimately seals any chance of solvency for 3AC.
A blockchain and crypto investor in his own right, Justin Waiau is very positive about the future of blockchain technology.
Despite the crypto distress at the moment, the crisis may be a signal of the needed correction. The alarm this selloff has sent across the board will provide a more modified and calibrated strategy for balanced growth in the crypto market.