The CFO of Huobi believes that the fall of the cryptocurrency market could create new arbitrage opportunities.
On June 14th, crypto markets plummeted due to the effects of the Celsius platform suspending customer withdrawals and the subsequent drop in the price of CEL tokens. As of 15:00 Moscow time, the price of bitcoin fluctuated around $22,300, and the price of ethereum was about $1,200. According to investing.com, the total capitalization of the cryptocurrency market has decreased by more than 50% since the beginning of this year to below $1 trillion, rolled back to February 2021 values.
Lily Zhang, CFO of Huobi Group, commented on such a massive market drop:
We believe that the immediate impetus for today’s cryptocurrency collapse was a massive sell-off by investors amid the suspension of withdrawal services by crypto lending company Celsius. This situation has become increasingly dangerous due to the collapse of LUNA/UST and pressure from the Federal Reserve, which has been raising interest rates over the past few months to reduce inflation risks.
The expert also noted that in the short term the market will remain in a precarious position. Lily Zhang believes that now the market should prepare for new liquidations that will strengthen the downtrend. On an optimistic note, the expert noted that as long as the pressure to sell stETH (a tokenized form of pegged ETH) continues to grow, demand will also increase in secondary markets, which in turn will create more affordable prices for stETH, which may be attractive to newcomers. investors, which will serve to increase demand and bring prices back to normal:
In the long term, this market volatility could be an opportunity for arbitrage profits and potential future income. We believe that stETH is resilient enough to withstand short-term impacts. The upcoming ETH 2.0 merger could also help bring market prices and demand back to normal.