Crypto week at glance: Volatility jolts crypto markets, BTC below $20k

economictimes.indiatimes.com:

This drop can be attributed to the DeFi Contagion effect that started with LUNA’s collapse and the rejection of GBTC’s request to become a Bitcoin Spot ETF. 3AC or 3 Arrows Capital has created havoc within the crypto industry. It is a digital asset-focused hedge fund that started back in 2012. It had invested in the top cryptocurrencies and held equity in cryptocurrency-related companies.

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The hedge fund borrowed from many institutions and reached an AUM or asset under management of $18 billion. The leadership of the hedge fund leveraged its reputation and secured these loans at a very low collateral rate. The hedge fund was already suffering on account of the current market conditions and its investment in Terra Luna, which is almost worthless compared to its investment. The leveraged Gbtc trades might have been the last straw for the hedge fund when the positions were liquidated. In simple terms what this means is that the hedge fund might not be able to pay back the loans it had taken. There are new allegations about the hedge fund being a Ponzi scheme, where they borrowed capital to pay the interest on the already borrowed capital. BlockFi, Voyager, and Babel Finance were some of the institutions and it has now been confirmed that it has defaulted on Voyager’s $700 million loan. Voyager, a platform similar to a crypto bank, has completely stopped its withdrawals. This is a horrible sign for people who have their money on the platform. The price action of the platform is indicating that people have lost complete confidence in Voyager. This is eerily