The price of Nexo (NEXO<\/a>) continued to fall on June 15 as crypto lending firms continue to be shaken by the falling cryptocurrency market.<\/p>\n Meanwhile, Nexo has denied rumors of exposure to Three Arrows Capital<\/a> (3AC), a Dubai-based crypto fund facing insolvency risks.<\/p>\n NEXO, which serves as a security token at a cryptocurrency lending platform<\/a> of the same name, fell nearly 25% to $0.61 a unit, its lowest price reading since January 2021. <\/p>\n The massive intraday decline came as a part of a broader downside move this week, which stretched NEXO’s losses to 40%.<\/p>\n An ongoing contagion in the crypto lending sector<\/a> contributed to NEXO’s underperformance. <\/p>\n Traders fear that most decentralized finance (DeFi)\/centralized finance (CeFi) firms, which offer high yields to clients on their cryptocurrency deposits, will default on their debts<\/a> due to the wipeout of nearly $1.5 trillion from the crypto market in 2022.\u00a0<\/p>\n The concerns continue to mount after the\u00a0collapse of Terra<\/a>\u00a0(LUNA) \u2014 now known as Luna Classic (LUNC) \u2014\u00a0a $40 billion algorithmic stablecoin project, in May.<\/p>\n A month later, Celsius Network, which offers clients up to 18% yields, paused withdrawals due to \u201cextreme market conditions<\/a>.\u201d Its clients have pulled almost half of their assets out of the platform since October 2021, thus leaving it about $12 billion as of May 17 to meet debt obligations.<\/p>\n I am definitely rooting for Celsius not to get liquidated. That is customer money. And fuck the funds who are hunting this stop loss. I hope they get rekt. #bitcoin<\/a><\/p>\n \u2014 Lark Davis (@TheCryptoLark) June 14, 2022<\/a><\/p><\/blockquote>\n Meanwhile, 3AC, a crypto hedge fund, has witnessed liquidations of at least $400 million<\/a>. In addition, on-chain data reveals that the firm may also have a minimum debt of $183 million against a collateral position of $235 million (derived in Staked Ether).<\/p>\n The address uses USDT\/USDC to repay the debt and withdraws ETH, and then converts ETH to USDT\/USDC through “sinofate.eth” and repays it, and so on. In almost 24 hours, the address has sold about 50kETH. https:\/\/t.co\/TUzqXBXBwF<\/a><\/p>\n \u2014 Wu Blockchain (@WuBlockchain) June 15, 2022<\/a><\/p><\/blockquote>\n The fund could transfer the economic risks to its lenders if it becomes insolvent.<\/p>\n “The lenders will bear the PnL [profit and loss] difference between how much they are owed versus what they get in liquidating their collateral,” noted<\/a> Degentrading, a market commentator known for highlighting the Celsius Network’s liquidation issues.<\/p>\n He added:<\/p>\n “That means defaults will cause SIGNIFICANT EQUITY erosion […]\u00a0Not all lenders are made equal. Celsius is the worst. It has gone under. Nexo, I don’t know. BlockFi is pretty bad as well.”<\/p><\/blockquote>\n However, Nexo says it currently has no exposure to 3AC despite partnering with the fund<\/a> over a nonfungible token (NFT) lending product in December 2021. The firm asserts that the partnership with 3AC did not take off.<\/p>\n All Nexo has ever done with Three Arrows Capital is sign a partnership with their NFT fund, but it did not take off and we currently have $0 business and exposure with them.<\/p>\n \u2014 Nexo (@Nexo) June 15, 2022<\/a><\/p><\/blockquote>\n Nexo has 100% liquidity to meet its $4.96 billion worth of debt obligations<\/a>, according to U.S.-based audit firm Armanino. That raises the firm’s potential to avoid a liquidity crisis in the event of a rising withdrawal rate, unlike Celsius.<\/p>\n Nonetheless, NEXO price treads ahead under persistent bearish risks, primarily due to the crypto market’s dire state in a high-interest rate environment. The NEXO\/USD pair now eyes the $0.58\u2013$0.69 range as its interim support due to its historical significance from December 2020 to January 2021.<\/p>\n A rebound from the $0.58\u2013$0.69 range could have NEXO bulls eye $0.883 as their interim upside target. This level was instrumental as support during the early-May price crash; it now coincides with the 0.786 Fibonacci retracement graph drawn from the $0.11-swing low to the $3.71-swing high.<\/p>\nNEXO price suffers on DeFi contagion fears\u00a0<\/h2>\n
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What’s next for the NEXO token?<\/h2>\n
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