The current collapse of cryptocurrencies is largely due to the tightening of US monetary policy and rising inflation. The collapse of Terra and Celsius does not have a direct impact on the mood of traders, but the closure of projects connected to these ecosystems is hitting fraught and stable coins.

ForkLog spoke to experts about the immediate prospects for the market.

Andrew the Great, founder of Allbridge:

The biggest problem with the collapse of Terra and Celsius is that they hit retail investors in the first place. A lot of people lost money on LUNA and Anchor on the same Terra. Against the same background, we read the news that the institutionalists managed to withdraw money from Anchor without a crazy discount and got into bitcoin. How did that happen is a question.

Celsius is exactly the same story, retail is suffering again. I don’t know what happened to the big players, how the money left their addresses in FTX, why and to whom is unknown. As a result, people will be very disappointed that they can conditionally raise their personal pension funds in crypto, because they lost here and there, they will again turn to non-crypto, more regulated, more understandable banking tools.

In the case of Terra and Celsius, there is a general feeling that there is some sort of coordinated attack on stablecoins, as they initially put in an algorithmic UST that seems decentralized and independent of the banking system. Celsius is indirectly or directly linked to Bitfinex and USDT, which is somewhat surprising against the background. In line with this, Justin Sun’s USDD is also surprising. We feel we are prepared for the fact that all crypto stables are bad and will instead be offered some kind of central banking currency on the blockchain.

The market is crashing and clearly in a bearish phase. This is often bad, but in practice it also means challenges for crypto teams who aren’t sold on time and don’t build up reserves in stables. We’re already seeing a wave of layoffs and hiring freezes.

Projects, especially those whose protocols are somewhat dependent on Terra or Celsius, could potentially fall apart. As we know, there were already those who wanted to contact them, this also affected their business: they will not be able to pay the money, they will lose the trust of depositors and they will be closed – a whole series of problems.

This will also affect those who are not directly connected to them as the market is collapsing. We see that the same Ethereum, which was recently above $4000, then over $2800 at the time of LUNA’s collapse, is now valued at $1200. How many people and projects were kept in the air, how many liquidations we will now see in Maker – also it is not clear.

So the situation is bad in every way. I can neither confirm nor deny the rumors that Alameda Research is systematically making money from all of this. But I have a feeling that while a big guy is crushing barns and making money on shorts, retail is hurting above all else.

This is too bad, because they will now have to wait a year or two for them to believe again in cryptocurrencies as a financial tool and start making a comeback.

WhiteBIT CEO Vladimir Nosov:

Based on the overall picture in the financial markets and the extremely acute geopolitical risks, I expect the market to continue to decline to zero in some cases.

Once the recession is over, we will see the true face of real assets and the full dawn of a new financial paradigm.

Sergey Mendeleev, CEO of Indefibank:

Terra won back a long time ago, now it does not affect the cryptocurrency market. Celsius is still breathing, but its impact on the market is much less than Terra, although there is a nuance in its relationship with USDT.

But that all blooms when compared to the impact of inflation figures approaching double-digits, with the impact of the Federal Reserve’s decisions and unprecedented measures to cool the markets.

Obviously, the measures are not enough and at the next meeting on June 15, we can hear the hawkish mood of the participants, which may cause even bigger blows in the main indices and may be the last step towards recession in world markets. .

And of course, any FTX-Alameda Research is adding fuel to the blazing fire, pushing prices into massive liquidations, and adding to the instability of the pools of stablecoins that are the pillars of the crypto economy. I think this is not going to end well and we may see a repeat of March 2020.

Grigory Klumov, founder of the stable cryptocurrency platform Stasis:

The decline of cryptocurrencies has intensified as margin positions have been liquidated on both centralized and decentralized sites. The potential bankruptcy of major counterparties such as Celsius and MicroStrategy raises fear.

It’s possible that Tesla and the board of other companies that buy bitcoin on their balance sheets are forcing management to put this asset up for sale because these positions have already accumulated significant paper losses.

In addition, US inflation data led to a gradual bond sale across all maturities. Stocks in both the tech sector and the broader S&P 500 also fell as the dollar strengthened as a funding currency. Therefore, the market is experiencing a large-scale cut in margin positions. As well as investors from all categories, including collective and private mutual funds. HNWIThose who bought both traditional and alternative assets with borrowed money are now selling them and paying back the loans.

The next level where Celsius positions must be liquidated is $23,000 per bitcoin. However, they added collateral on the night of June 14, lowering the liquidation rate by US$2,000-3,000. The level at which MicroStrategy positions must be liquidated is $22,000 per BTC. Here’s what we know about publicly traded and semi-public companies.

You can be absolutely certain that the $20,000 – $21,000 per bitcoin levels will become critical when a large number of margin positions are liquidated and the market under the liquidation yoke may drop to $17,000 – $18,000 for a short period of time.

This can be a great entry point for conservative investors who have cash in their portfolio and have timed the likelihood of such situations to occur.

Mikhail Chobanyan, founder of the Kuna exchange:

Turbulence has yet to come. We wait for the collapse of financial markets, the defaults of countries, hyperinflation of fiat currencies, and don’t forget anyone with a hand on the nuclear button. Still, unfortunately, in the future.

Lily Zhang, CFO of Huobi Group:

In the short term, the market will remain in an unstable position. As we saw in the stETH example, we should prepare for new liquidations that will increase the downtrend.

On an optimistic note, demand in the secondary markets will increase as the pressure to sell STETH continues to increase. This, in turn, will make SteTH more accessible to new investors, which will increase demand and bring prices back to normal.

In the long run, this market volatility can be an opportunity for arbitrage profits and potential future income. We believe stETH is flexible enough to withstand short-term effects. The upcoming ETH 2.0 consolidation could also help market prices and demand return to normal in the long run.