2022 has not been a great year for cryptocurrency exchanges and firms. Approximately 10 crypto firms have suspended withdrawals since the beginning of the year, and several have had to file for bankruptcy protection.
The crypto market is recording huge capital outflows which has further dampened the huge gains made in the past weeks. Given the heavy selling pressure, Bitcoin (BTC) is also facing a fight to keep its price above $20,000.
Now, a warning has been issued by a famous crypto analyst about the possibility of the onset of a domino-style effect. This would be similar to the 2008 market crash as this time too, the market is facing a downward momentum.
The market lost $70 billion in a single day as bitcoin’s most valuable crypto asset declined. On August 19, the Evening Standard reported that the crypto industry may undergo a domino effect similar to the financial market in 2008.
As per Lennix Lai, the Director of Financial Markets at OKX, the world’s second-largest crypto exchange by spot trading volume,
“The domino effect we are seeing among crypto firms is similar to the 2008 financial crash among Wall Street firms.”
The 2008 Crash
Ever since bitcoin fell, 10 crypto firms including lending firms like Terra (LUNA) and Celsius (CEL) have collapsed and halted all withdrawals amid the market crash.
This happened in 2008 too. Several Wall Street Companies buckled under pressure as the Housing Market was hit and borrowers were not able to pay off their loans.
Lai explained:
“Both cases resulted in entities taking an illogical risk, largely at the expense of investors.”
As the market has lost $70 billion in a single day, leading cryptocurrency trading expert Michaël van de Poppe opined that the market cap is facing rejection at a critical resistance level.
The crypto rally expectations of the market participants have now been badly hit. Despite a weak first half of 2022, it looks like there will be no respite in the second half as well. With crashes, chaos, illegal activities and increasing regulations, people are losing faith in the crypto industry.
