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In late June, bitcoin briefly sank below the $19,000 mark again for the first time in several weeks following news that Three Arrows Capital – a cryptocurrency hedge fund – was being forced to liquidate.

Three Arrows Capital Is Falling Apart

The organization had been under suspicious eyes for some time. Not long ago, representatives of Three Arrows Capital swore that no liquidation was coming, claiming the following:

We are in the process of communicating with relevant parties and fully committed to working this out.

Clearly, they were either wrong or trying to keep a straight face for media outlets while fearing the worst. Confirmation has since been issued that Three Arrows Capital is indeed entering such liquidation proceedings after it invested heavily in the Luna token that is widely blamed for the ongoing crypto collapse we are witnessing today. The company is now facing serious legal challenges from creditors due to unpaid debts, and Three Arrows isn’t pulling its weight anymore.

Edward Moya – an analyst at broker Oanda – explained in a statement:

After reports of default, it comes as no surprise that Three Arrows Capital, a cryptocurrency-focused hedge fund, has been ordered to liquidate. Concerns are growing that the collapse of Three Arrows Capital could trigger further market contagion.

In the meantime, bitcoin and many of its altcoin counterparts continue to face serious selling pressure from institutions and retailers alike as the market engages in further price dips. Yves Longchamp – head of research at SEBA Bank – explained in an interview:

Bitcoin continues to be under pressure as other assets are. The mix of high inflation, rising interest rates, and recession weigh on cryptocurrencies.

The market is also being hammered by exchanges and lending platforms that appear to be playing by their own rules. For example, companies like Celsius and Babel have recently issued halts on all customer withdrawals, and at press time, that motion is continuing thanks to crypto exchange Coin FLEX. The company is the latest to prevent customers from gaining access to their money due to what it’s referring to as “extreme market conditions.”

Initially, this was supposed to be only temporary, and the withdrawal was set to end within a 24-hour period, though it looks like that maneuver has been rescinded.

Is a Recession Coming?

There is also more speculation following words from Fed chair Jerome Powell, who said the U.S. is prepared to accept any risk of a recession if it can potentially bring prices back down to normal levels. He stated:

Is there a risk we would go too far? Certainly, there’s a risk. The bigger mistake to make — let’s put it that way — would be to fail to restore price stability.

The Fed has consistently hiked rates as a way of combating inflation. This has also hurt bitcoin in the long run.

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