Modern Economic Nonsense — Crypto companies’ bankruptcy wave is healthy
Crypto markets are in a bearish trend with prices dropping continuously over the past few months. The market had been on a bull run for most of 2021, and sustaining such price increases is no longer possible. As prices drop, crypto companies that have kept their operations going by selling assets, or keeping afloat with venture capital, will get hit harder than others. Crypto companies with a sound business model and cash reserves can ride out the storm and continue operations when prices rebound. However, those without liquid assets or adequate operating capital may not be so lucky. Crypto companies going out of business is nothing new, but recently we’ve seen an unprecedented wave of bankruptcies as more and more businesses fail at an accelerated pace. Cryptocurrency has grown exponentially since its inception, making it extremely difficult for any company to stay afloat if they don’t have access to enough capital from outside investors or venture capitalists. Therefore, many crypto companies that can’t afford to keep operating once the bear market hits will eventually file for bankruptcy protection just like other industries do when they cannot pay back loans from outside investors anymore.
