Crypto 'Bank Runs' Fostered by Whales In 2022: Chicago Fed
2022’s crypto winter was quite harsh. A host of companies from the industry collapsed one after the other. This deteriorated investors’ sentiment and ended up putting pressure on the price of the assets. A recent report from the Federal Reserve Bank of Chicago put things into perspective and revealed the role that institutions, or large account holders, played in the crypto bank runs . Specifically, the report noted, “While the platforms had many retail clients, the runs were spearheaded by customers with large holdings, some of which were sophisticated institutional customers.” Consider Celsius’ case for instance. Every group provided Celsius with about $1.9 to $2.0 billion worth of funding before June 9, 2022. The report underlined that the owners of large-sized accounts, i.e. with over $500,000 in investments, were “the fastest to withdraw.” Moreover, they ended up withdrawing “proportionately more” of their funding. The report added, “ In fact, during this run, 35%...