ADVFN News |  NEXO price drops 40% in three days due to rumors of links to ‘bankrupt’ crypto funds

ADVFN News | NEXO price drops 40% in three days due to rumors of links to ‘bankrupt’ crypto funds

The price of Nexo (BINA: NEXOUSDT) continued to decline on June 15 as cryptocurrency lenders were shaken by the decline in the cryptocurrency market.

Nexo, meanwhile, has denied rumors that the Dubai-based cryptocurrency fund, Three Arrows Capital (3AC), is facing bankruptcy risk.

NEXO Price is suffering from the fear of DeFi infection

NEXO, which serves as a security token on the cryptocurrency lending platform of the same name, has the lowest price since January 2021, down about 25% to $ 0.61 per unit.

The big intraday decline came as part of a broader negative move this week that increased NEXO’s losses by up to 40%.

The persistent contagion in the cryptocurrency lending sector contributed to NEXO’s poor performance.

With nearly $ 1.5 trillion withdrawn from the cryptocurrency market in 2022, most DeFi / CeFi companies are offering customers high returns on their cryptocurrency deposits, traders fear.

Concerns are growing after the Terra, $ 40 billion algorithmic stablecoin project collapsed in May.

One month later, Celsius Network, which offers customers up to 18% revenue, stopped withdrawing due to “extreme market conditions”. Its customers have removed nearly half of their assets from the platform since October 2021, and have about $ 12 billion left to meet debt obligations by May 17.

Meanwhile, 3AC, a cryptocurrency hedge fund, has seen at least $ 400 million in liquidation. Furthermore, on-chain data suggests that the company may have a minimum debt of $ 183 million compared to its collateral position of $ 235 million (derived from stacked ether).

If the fund goes bankrupt, the financial risk can be transferred to its creditors.

“Borrowers will bear the PnL difference [lucros e perdas] How much they owe and what they have received in their pledge settlement, Observed Degenttrading, a market critic known for highlighting the settlement issues of the Celsius network.

He added:

“This means that default will reduce Significate Equity […] Not all borrowers are the same. Celsius is the worst. He went bankrupt. Nexus, I don’t know. Blockfy is bad. “

However, Nexo says that despite its partnership with the Fund for Non-Fungible Token Loan (NFT) production in December 2021, 3AC currently has no exposure. The company claims that the partnership with 3AC is not complete.

What’s next for the NEXO token?

According to American auditing firm Armanino, Nexus has 100% liquidity to meet its 4.96 billion debt obligation. This increases the company’s ability to avoid cash shortages in the face of rising withdrawal rates, in contrast to Celsius.

However, the price of NEXO continues to rise under downside risk, mainly due to the dire state of the cryptocurrency market in an environment of high interest rates. Due to its historical significance from December 2020 to January 2021, the NEXO / USD pair now looks to the समर्थन 0.58 to $ 0.706 range as temporary support.

The temporary bullish target for a rebound in the $ 0.58-0.69 range could be NEXO’s Bulls Eye at 8 0.883. This level was important as a basis for the fall in prices in early May.

On the other hand, falling below $ 0.58 to $ 0.69, NEXO could see its December 2020 support level close to $ 0.43, which is about 35% lower than today’s price.

By Jesus Gola

Disclaimer: ADVFN does not make asset recommendations. The article is about journalism. The opinions expressed in this article are those of the author only. Content is for informational purposes only. It is very important to do your own analysis before making any investment.

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