The year 2022 wasn’t wonderful for the Crypto Market. Since the start of the year, some ten Cryptocurrency companies have had to cease withdrawals, and many of them have had to seek bankruptcy protection.
Massive capital withdrawals have been seen in the Crypto Market, further undermining the significant gains gained in recent weeks. Bitcoin (BTC), which is under intense selling pressure, is also struggling to keep its price above the $20,000 level.
Now, a well-known crypto specialist has issued a warning about the potential commencement of a domino-style impact. Given that the crypto market is experiencing a downward velocity this time around, it would be comparable to the market collapse of 2008.
Due to the decline in Bitcoin, the most valuable crypto asset, the market lost $70 billion in a single day. According to a story from the Evening Standard on August 19, the cryptocurrency market may see a domino effect similar to what happened to the financial world in 2008.
Lennix Lai, the Director of Financial Markets at OKX, the second-largest cryptocurrency exchange in the world by volume of spot trades, says
“The domino effect we’re seeing among crypto firms is akin to the 2008 financial crash among Wall Street firms. “
The 2008 Crypto Market Panic
Ten cryptocurrency companies, including Terra (LUNA) and loan companies like Celsius (CEL), folded when Bitcoin fell, stopping all withdrawals in the midst of the market fall.
This also occurred in 2008. As the housing market suffered and borrowers were unable to repay their debts, a number of Wall Street companies crumbled under the strain.
Lai clarified:
“Both cases resulted from institutions taking an illogical risk, largely at the expense of investors.”
Leading cryptocurrency trading analyst Michal van de Poppe said that the market cap is encountering rejection at a crucial resistance level as a result of the market losing $70 billion in a single day.
The prospect of a crypto surge has now been brutally dashed for market players. Despite a dismal first half of 2022, it seems like the second half won’t be much better.
Due to crashes, instability, illicit activity, and escalating restrictions, people are starting to lose trust in the cryptocurrency business.
