Cumberland fund experts believe that the speed of the recovery of the cryptocurrency market will be determined by the speed with which assets move from insolvent companies to solvent ones.
Cumberland believes that assets belonging to troubled companies should be liquidated in order to offset debt obligations. Also, the market recovery will be affected by the fate of these assets.
“As large and opaque off-grid liquidation streams looming, market participants will question whether the capital is worth investing. This reduces liquidity and increases volatility. Uncertainty about the size and timing of the sale of assets hangs over the market like a cloud,” — says in a company tweet.
Cumberland analysts do not consider the current situation in the cryptocurrency market to be something extraordinary. According to them, it is “no different from examples in financial textbooks” and companies with excessive leverage “for hundreds of years suffered punishment during a bear trend.”
As a result of market turmoil, some of the crypto companies significant for the cryptocurrency industry came under serious pressure. In June, just a month after the Terra crash, crypto lending platform Celsius stopped withdrawals for its clients. And early July was marked by the fact that Voyager Digital filed for bankruptcy in the Southern District of New York.
Source: Bits
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