Is crypto yield going down forever?

There have been a lot of ups and downs in the crypto market, but the yield has stayed strong until a few companies went bankrupt.

Before prices plummeting 88% to $100 billion by the end of the year, cryptocurrencies remained subdued for nearly three years, reaching a high of $830 billion in early 2018. Until early 2021, the cryptocurrency market has not yet broken through its previous record high.

Currently, the crypto market is 57 percent lower than it was at its top of $1.3 trillion, and some journalists at Crypto Lists feel that we are in the midst of second crypto winter. It is possible that this downturn will continue for some time, and things could get worse if that is the case. Patient crypto investors, on the other hand, can benefit from this. However, everyone hope that the crypto yields are not going down too quick or too much.

Vauld Suspends Withdrawals

Vauld, a cryptocurrency exchange, announced on Monday that it has abruptly stopped accepting deposits, withdrawals, and trading on its platform. The Singapore-based business said it was discussing reorganization alternatives with its financial and legal consultants. The exchange’s crew stated that it was experiencing financial difficulties due to various factors in the cryptocurrency industry.

According to Vauld, consumer withdrawals totaled $197.7 million over the previous two months. Withdrawals began on June 12th, when Terraform Lab’s UST collapsed, causing a ripple effect through the cryptocurrency market. The latest situation with the suspension of withdrawals by Celsius Network and the default on loans by Three Arrows Capital made things worse.

Vauld’s management consulted financial and legal consultants to examine and analyze all feasible options. According to the company’s statement, the options include a possible reorganization that would best serve the interests of Vauld’s stakeholders.

As many feared, India’s crypto trading volumes fell precipitously last week when the government enacted a long-anticipated 1 percent transaction tax. Within a few days, the amount of trading on the country’s biggest stock exchanges had more than halved. It was only after July 1 that the tax went into effect that this dramatic decline was seen. The Indian government has implemented the tax rule to discourage cryptocurrency trading nationwide as part of a broader effort.

Meanwhile, Vauld management is looking for a solution, and the subsequent announcement could be about user withdrawals. According to the company’s release, they are currently talking with potential investors about joining the Vauld group of enterprises.

Celsius Goes Bankrupt

On Thursday, Celsius Network filed for bankruptcy according to Reuters, after looking into several possibilities including potential acquisitions and refinancing its debts.

Celsius froze withdrawals and transfers earlier this month, citing extraordinary market conditions, preventing its 1.7 million customers from redeeming their assets.

There has been a great deal of volatility in the digital asset market recently due to investors selling riskier investments because they are concerned that aggressive interest rate hikes to control stubborn inflation could send the economy into recession. The European Union has agreed on breakthrough regulations for monitoring crypto assets; EU legislators said on Thursday, as the crash in Bitcoin increases pressure on authorities to restrain the sector.

Since the collapse of TerraUSD (UST), a prominent stablecoin tied to the US dollar, in May, crypto assets have lost more than $400 billion. Another 6% drop on Thursday saw Bitcoin fall to $18,866.77, a loss of more than 70% from its peak in November last year. Similar to banks, Celsius took crypto deposits from retail clients and invested them in the equivalent of the wholesale crypto market, which includes “decentralized finance (DeFi),” sites that employ blockchain technology to deliver services from loans to insurance outside of the traditional financial market.

Celsius guaranteed enormous returns to retail consumers, sometimes as high as 19% yearly. As a result, individual investors have poured money into Celsius and other similar platforms in search of high yields and quick returns. Investors in crypto yield can expect lower returns after the bankruptcy, but hopefully other firms will try to fill the gap.

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Three Arrows Capital plunges into liquidation

A prominent cryptocurrency hedge fund named Three Arrows Capital has been liquidated, according to Crypto Lists, making it one of the greatest victims of the ongoing “crypto winter.” It has only been a few days since Teneo was brought on board to handle the liquidation process, which is still in its early stages. As soon as the assets of Three Arrows Capital get realized, the restructuring business will set up a website with instructions on how creditors can get in touch and submit any claims.

However, a drop in digital currency pricing, which has seen billions of dollars wiped off the market in recent weeks, has harmed Three Arrows Capital and exposed a liquidity crisis at the company. On Monday, Three Arrows Capital defaulted on credit from Voyager Digital consisting of $350 million in USDC, a stablecoin pegged to the U.S. dollar, and 15,250 Bitcoin, valued at around $304.5 million at current exchange rates. Three Arrows Capital was exposed to the defunct algorithmic stablecoins terraUSD and luna.

Cryptocurrency lending firms BlockFi and Genesis, based in the United States, reportedly liquidated part of the positions held by Three Arrows Capital earlier this month. BlockFi had loaned Three Arrows Capital, but the company could not fulfill its margin call. A margin call is a circumstance in which an investor is forced to make additional investments to prevent losing money on a deal made with borrowed money.

As Three Arrows Capital is winding down, there are growing concerns about the impact on other areas of the market that may have been exposed to the firm.

Liquidity problems have been reported by other cryptocurrency firms as well. Due to harsh market conditions, lending company Celsius and the cryptocurrency exchange CoinFlex were forced to halt customer withdrawals.
CoinFlex, on the other hand, ran into another issue with a client who did not pay back a $47 million loan, which caused a liquidity issue for the business.

Final Thoughts

In the light of many crypto sites giving too high a yield, Crypto Lists suggests that people can use Swissborg, Coinbase, FTX, and Binance mainly because these sites feel way safer and characterize more reasonable yields.