what does it mean for crypto?

Crypto hedge fund Three Arrows Capital (3AC) has had its goose finally cooked after failing to repay a $670 million loan owed to crypto brokerage firm Voyager Capital.

But while what looks like a final nail has been hooked in place by Voyager via its notice of default issued on Monday, 3AC was already massively hit by the collapse of the Terra Luna cryptocurrency last month.

Failure to meet a margin call also saw crypto lender BlockFi liquidate the company’s assets – one among multiple such moves across the ecosystem.

3AC and what it means for crypto

CNBC’s Arjun Kharpal said on Tuesday the risk is really in what happens next with those firms that are heavily exposed to 3AC.

According to the analyst, the uncertainty and jitters are already being felt in the market, with pressure on Bitcoin price on Tuesday (BTC/USD is still above $20k at the moment but it’s nearly 3% down in the past 24 hours).

But going forward, Kharpal says the industry could find a solid footing. Among issues to be addressed, however, are structural issues like the outrageous yields firms like Celsius have been offering and which a major factor in the liquidity issues are facing the lender and others.

Acquisitions and consolidations are also another outcome of the crypto winter and the credit conundrum that some projects have found themselves in. Already, several market players, including crypto exchange FTX are eyeing the M&As route as one way of navigating this.

Of course, there’s a lot that could still happen in the market, with the likely contagion linked to 3AC one to watch.