What Voyager Bankruptcy Means for Cryptocurrency Market

In the weeks preceding Voyager Digital’s (VYGVF) bankruptcy, news from the cryptocurrency platform looked bleak. The company disclosed that it lent money to 3AC. When 3AC declared bankruptcy, Voyager could not get back. Voyager then froze customer withdrawals and activity.

Voyager aggressively grew its customer base before this debacle in dishonest ways. It marked customer deposit accounts as ‘safe.’ For example, the company implied that the Federal Deposit Insurance Corporation (“FDIC”) would offer customers deposit safety. Upon Voyager’s bankruptcy filing, Bloomberg noted that users would not get 100% of their assets back.

The platform’s demise is one of many implosions in the crypto industry. Luna lost its peg to the US dollar. Investors lost nearly all their value as a result.

FTX To the Rescue

FTX is acting as the lender of last resort for the stronger firms in need of capital. So far, its support is working. Ethereum and Bitcoin bottomed recently. They are still well off their 52-week high. Still, FTX’s support will temporarily end the bearish momentum for cryptocurrency prices.

Tightening credit conditions will continue to shake out overly leveraged lenders. Crypto investors should watch the daily prices of ETH and BTC. Volatility will increase while trading volumes will decrease.