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Exclusive | Fear grips cryptocurrency traders and magnifies the global rout in US$247 billion DeFi market, Binance’s founder CZ says
- There were a total of US$879 million of liquidations this recent weekend, according to data compiled by Coinglass
- Three Arrows Capital in Singapore was the latest to be liquidated, after Babel Finance in Hong Kong halted customers’ withdrawals last week
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The increasing use of high-yield leveraged products has exacerbated the rout in the US$247 billion decentralised finance (DeFi) industry, as fear gripped cryptocurrency traders and sent the market into its biggest shakeout since 2018, said the founder of the world’s largest cryptocurrency exchange.
Three Arrows Capital, a US$10 billion cryptocurrency hedge fund in Singapore, was the latest to fall victim to the market rout, being liquidated by multiple exchanges after failing to meet margin calls amid a crash in the prices of virtual currencies.
Bitcoin, the biggest virtual currency, plunged below US$20,000 on Monday, the lowest in 18 months, while the prices of other coins tumbled across the board.
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“Compared to the last bear market in 2018, we are seeing more liquidity issues that tend to cascade across the market, affecting even larger players in the industry,” said Zhao Changpeng, founder and chief executive of Binance, speaking from France in an interview with South China Morning Post. “This is due to the growth of DeFi staking and lending products.”
Binance, which recently set up its headquarters in Dubai, is “not the primary trading venue” for Three Arrows, and abstained from extending the failed hedge fund a large credit line, said Zhao, known simply as “CZ” among the world’s cryptocurrency traders. Nonetheless, many of these firms have approached Binance for rescue, he said without elaborating.
There were a total of US$879 million of liquidations this recent weekend, according to data compiled by Coinglass.
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