According to FSInsight, a combination of economic pressures and over-leveraged yield plans has caused the forceful selling of cryptocurrencies in the previous few days. This has wiped off more than $200 billion in revenue from the digital asset market.
Head of digital asset strategy Sean Farrell noted that “the decline in terraUSD (UST) and Celsius is long-term supportive for the market,”
Furthermore, the note stated that in the conventional banking business, such open demonstrations of illiterate capital destruction are frequently neglected. Thankfully, crypto markets have the advantage of “repeating and developing at a faster speed.
Massive borrowing with an unstable staking method
“In Celsius terms, if income-generating tactics sound too impressive, they usually are,” FSInsight said. The crypto lender was also “notable for pushing ‘risk-free’ returns on client assets.” This decision demanded massive borrowing levels combined with dangerous and unstable staking methods.
The crypto lender was also “notable for pushing ‘risk-free’ returns on customer assets,” which demanded massive levels of borrowing combined with dangerous and unstable staking methods.
“In a tense situation, leverage becomes a deadly double-edged sword that can strike when you least expect it,” the note continues.
FSInsight is bullish on crypto pricing in the later part of the year, and believes now is the moment for medium to long-term traders to consider increasing their allocation to bitcoin (BTC).
