Cryptopocolypse: Terra Luna and Three Arrows Capital implosion triggered contagion spread
The cryptocurrency sector is showing early signs of stabilisation after two successive implosions – the collapse of the Terra Luna ecosystem and crypto hedge fund Three Arrows Capital – which unleashed a tidal wave of contagion across the broader digital assets market.
In the following weeks, around a dozen crypto participants, including lending platforms, brokerage firms, custodians, hedge funds and exchanges, suffered margin calls, liquidations and some filed bankruptcy proceedings – much of which can be traced back to these two initial events. The resulting fallout created the still unravelling ‘cryptopocolypse’ and is reminiscent of the systemic risk that ricocheted throughout global financial markets after the US subprime mortgage market collapsed in 2008.
