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Arcane Research Releases Warning About Digital Currency Group

Author

Jonathan Gibson

Tags

Reading time

3 mins
Last update

Author

Jonathan Gibson

Tags

Reading time

3 mins
Last update

Author

Jonathan Gibson

Tags

Reading time

3 mins
Last update

graph on a financial related background Crypto market Update Arcane Research

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Arcane Research has released a new warning about Digital Currency Group (DCG) as this could have a negative impact on the cryptocurrency market. 2022 was a very difficult year for digital assets. Bitcoin (BTC) fell from $69,000 in November 2021 to below $16,000 a few months ago. But there could be more pain for BTC and other virtual currencies as new selling pressure could be added in the coming weeks and months. 

Arcane Research Releases Warning About Digital Currency Group

Later in 2022, the cryptocurrency exchange FTX imploded, creating a very hard situation for the whole cryptocurrency market. This situation has affected not only the exchange and users in this platform, but this has affected multiple other companies and firms operating in the crypto industry. 

One of the subsidiaries of this company, Genesis, entered an insolvency crisis. With this situation, multiple analysts believed that there could be an issue with other firms, including Grayscale. Let’s not forget that Grayscale holds a large number of BTC that could get liquidated in the future if Grayscale faces problems. 

This could trigger a massive market sell-off that could push the price of virtual currencies even lower. This is the warning presented by Arcane Research. The bankruptcy of Digital Currency Group could trigger the liquidation of their assets. This would end up creating a massive sale of BTC and push the whole market even lower than the current market. 

Furthermore, Genesis is also owning Gemini, one of the most popular and recognized virtual currency exchanges in the world, with close to $900 million. The whole situation could deteriorate and affect other companies as well. 

According to data shared by CoinGecko, Bitcoin is being traded at close to $16,840 per coin and it has a market capitalization of $323 billion. Another massive sell-off as it happened in 2022 in November could create a situation in which Bitcoin could revisit its previous lows registered at the end of 2022. 

The bear market continues. Nowadays, Bitcoin does not show signs to start a strong recovery as we saw in late 2020. Therefore, the bear market could continue in the future, especially if more companies such as Digital Currency Group inform that they were affected by the current bear market and implosion of the FTX ecosystem. 

It is just a matter of time to see what could happen with these other companies and how the market could be affected. Bitcoin and cryptocurrencies tend to work in cycles, which are usually very well-marked. Most bear markets tend to take multiple years before a new bull run starts, usually close to Bitcoin’s halving event. Although is not said that Bitcoin will move higher before or after its next halving event in 2024, there are larger possibilities to see this happening as the new reward of BTC will be reduced to 3.125 BTC per block. 

Now, companies must do everything they can in order to avoid bankruptcy and create a contagion effect that could harm the entire crypto industry once again.