Rp 30 Quadrillion Lost, Will The Crypto Winter Pass?

     The crypto world is hit by a prolonged winter or crypto winter. The capitalization of the crypto market has experienced a massive decline, around US$ 2 trillion or IDR 30 quadrillion, since the peak of the massive rally in 2021. Bitcoin, the world's largest digital coin, fell about 70% from its November 2021 all-time high of nearly $69,000. Today, bitcoin is in the range of US$ 20,000

The crypto winter is characterized by a weakening of the crypto exchange rate and a prolonged decline in investor interest. This phenomenon last occurred between 2017 and 2018. Sat it, bitcoin fell from a range of US$ 20,000 at the end of 2017 to US$ 3,200 at the end of 2018. Ethereum fell more severely from US$ 1,400 to below US$ 100. In addition, many new coins, which emerged from the initial coin offering (ICO) trend of the time, became worthless as the market became saturated. Clara Medalie, research director of crypto data company Kaiko, told CNBC that the cause of the crypto winter 2017-2018 was due to the "rupture of the crypto hype bubble".

Unlike 2017-2018, this year's crypto winter is due to macroeconomic factors. This year's crypto movement was influenced by macro sentiment such as us inflation which heated up, forcing the Federal Reserve to raise interest rates. The Fed is targeting inflation in the range of 2% but the fact is that inflation broke through 9% this June on a year-on-year basis. Crypto assets move directly proportional to equities or stocks. Bitcoin for example fell 58% in the second quarter of 2022, the worst performance since 2011. In the same period, the benchmark index of Wall Street technology companies, nasdaq, fell more than 22%.

Carol Alexander, professor of finance at Sussex University, said the drop in crypto this year was due to Wall Street players betting enormously on crypto success (highly leveraged). So that when it fell, the plummet dragged down many parties. The biggest casualties of cypto winter this year are the stablecoin TerraUSD (UST) and the related coin UST, which is luna. Stablecoins are crypto assets whose value is pegged to the US dollar. Ideally, one UST coin costs the same as US$ 1 dollar, but in fact UST and Luna lose all their value. In fact, according to Cryptocraziac's account there are already eight people who are confirmed to have committed suicide because of their investment in the subsidence.

Billions of dollars of crypto companies also fell. Crypto loan company Celsius promises a return of up to 20% while its customers stay sweetly, but when crypto plummets, they can't pay their customers. Celsius announced that it has started the bankruptcy protection filing process, on Wednesday (13/7/2022). In fact, the company had assets worth $11.8 billion as of May 17, down from $26 billion in October last year, and had a total loan of US$8 billion to its clients.

One of the big players in the crypto sector, Three Arrows Capital or 3AC, is rumored to have entered the liquidation process after defaulting on debts of up to US$ 654 million or RP 9.7 trillion. The Three Arrows managed about $10 billion in assets as of last March.

Digital asset broker Voyager Digital has also stopped all customer trading, deposits, withdrawals and loyalty rewards (rewards), according to a statement released Friday afternoon local time (1/7/2022). El Salvador, the first country to make bitcoin legal tender since last September, said its fiscal conditions were still safe despite the World Bank and IMF warning of the risk of default. "Fiscal risks are minimal," Said El Salvador's Finance Minister Alejandro Zelaya on Monday (13/6/2022).

It is unclear when this blizzard will end, given that macroeconomic uncertainty, which is the cause of the plunge in equities and crypto, is expected to continue until the end of the year. According to the Fed's Beige Book, US inflation is expected to remain high until the end of the year and fears of a recession are increasingly evident.

 

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