NEXO price drops by 40% in three days due to rumors about connection to "bankrupt" cryptocurrency fund

NEXO price drops by 40% in three days due to rumors about connection to “bankrupt” cryptocurrency fund – Mail Bonus

Nexo (NEXO) prices continued to fall on June 15 as Nexo denied rumors of exposure to Three Arrows Capital (3AC), a Dubai-based cryptocurrency fund.

NEXO price suffers from fear of DeFi contagion

NEXO, which serves as a security symbol in the eponymous cryptocurrency lending platform, fell by almost 25% to $ 0.61 per unit, its lowest price since January 2021.

A large drop within the day came as part of a broader write-down this week, which extended NEXO’s loss to 40%.

NEXO / USDT weekly price list. Source: TradingView

Continued contagion in the cryptocurrency lending industry contributed to NEXO’s underperformance.

Traders fear that most DeFi / CeFi companies, which offer customers high returns on their cryptocurrency deposits, will pay off their debts because nearly $ 1.5 trillion will be spent on the cryptocurrency market by 2022.

Concerns continue to grow after the collapse of Terra, a $ 40 billion stablecoin algorithm, in May.

One month later, Celsius Network, which offers customers up to 18% returns, paused withdrawals due to “extreme market conditions”. Its customers have withdrawn almost half of their assets from the platform since October 2021, leaving about $ 12 billion as of May 17 to meet commitments.

At the same time, 3AC, a cryptocurrency hedge fund, has witnessed the liquidation of at least $ 400 million. In addition, chain data show that the company could also have a minimum debt of $ 183 million against a $ 235 million collateral (sourced in Staked Ether).

The fund could transfer the economic risk to its lenders if it goes bankrupt.

“Lenders will carry PnL [profit and loss] a difference in how much they are owed in return for what they get when they pay off their mortgage. ” noted Degentrading, a market analyst known for its Celsius Network winding-up business.

He added:

“This means that defaults will cause a significant reduction in equity […] Not all lenders are created equal. Celsius is the worst. It’s gone under. Nexo, I do not know. BlockFi is also pretty bad. “

However, Nexo says it does not pose a risk to 3AC, which is in partnership with the Fund due to its rigid (NFT) credit product in December 2021. The company claims that its partnership with 3AC has not picked up.

What’s next for the NEXO symbol?

Nexo has 100% liquidity to meet its $ 4.96 billion debt, according to US auditing firm Armanino. Unlike Celsius, it increases the company’s ability to avoid a liquidity crisis if the credit ratio rises.

Nevertheless, NEXO prices rise ahead of persistent bearish risk, primarily due to the alarming position of the cryptocurrency market in a high interest rate environment. The NEXO / USD pair now sees the $ 0.58- $ 0.69 range as temporary support due to its historical significance from December 2020 to January 2021.

NEXO / USD weekly price. Source: TradingView

A rebound from the $ 0.58-0.69 range could have the NEXO bulls eye $ 0.883 as its tentative target. This level was an important support for the price collapse in early May; it now coincides with the 0.786 Fibonacci retracement chart, which is reduced from the $ 0.11-swing low to the $ 3.71-swing high.

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In turn, a fall below the $ 0.58- $ 0.69 range could lead to the support level of the NEXO watch December 2020 near $ 0.43, down by 35% from today’s price.

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