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The price of Nexo (NEXO) kept falling on June 15 as crypto lending firms continued to be shaken by the crypto winter season. Nexo was speculated to be related to Three Arrows Capital (3AC), a Dubai-based crypto fund at risk of going insolvent. However, the company has denied the rumors of exposure to the company and has 100% liquidity to meet its debt obligations.
NEXO, a security token at a cryptocurrency lending platform bearing the same name, fell by almost 25% to $0.61 a unit, its lowest price valuation since January 2021. The decline experienced by NEXO today is a part of a broader downturn that started at the beginning of the week, stretching NEXO’s losses to 40%. A crucial factor responsible for NEXO’s fall in price can be attributed to the ongoing contagion in the cryptocurrency lending space.
This contagion fear is borne out of the concerns from crypto traders that most decentralized finance and centralized finance firms that offer high yields on crypto deposits will not be able to pay their debts due to the reduction of the total crypto market cap in 2022 by about $1.5 trillion. These concerns continue to grow after Terra (LUNA), now known as Luna Classic (LUNC), a $40 billion algorithmic project, collapsed in May. A month later, Celsius, a crypto lending platform, stopped transfers and withdrawals due to turbulent market conditions after customers had removed almost half of their assets.
Furthermore, another crypto hedge fund, 3AC, recently witnessed liquidations of at least $400 million, with on-chain data revealing that the company may also have a debt of over $183 million against a collateral of $235 million. Although U.S-based audit firm Armanino stated that NEXO has 100% liquidity to meet its $4.96 billion debt obligations, NEXO price threats might cause concerns for investors. NEXO price now eyes the $0.58-$0.69 range, any decline below this level may see the token go down by another 35% to around $0.43.
Featured Image: Megapixl © Jiraart1986
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