For a generation of alienated techies, crypto’s all-for-one ethos was its biggest draw. Now panic is spreading across this universe — and that same ethos is posing what may be the biggest threat yet to its survival.

What started this year in crypto markets as a “risk-off” bout of selling fueled by a Federal Reserve suddenly determined to rein in excesses has exposed a web of interconnectedness that looks a little like the tangle of derivatives that brought down the global financial system in 2008.

As bitcoin slipped almost 70% from its record high, a panoply of altcoins also plummeted. The collapse of the Terra ecosystem — a much-hyped experiment in decentralized finance — began with its algorithmic stablecoin losing its peg to the U.S. dollar, and ended with a bank run that made $40 billion of tokens virtually worthless.

The seeds that spawned the meltdown — greed, overuse of leverage, a dogmatic belief in “number go up” — aren’t anything new. They’ve been present when virtually every other asset bubble popped.

If Terra was this crypto winter’s Bear Stearns, many fear that the Lehman Brothers moment is just around the corner. Just as the inability of lenders to meet margin calls was an early warning sign in the 2008 financial crisis, crypto this month has had its equivalent: Celsius Network, Babel Finance and Three Arrows Capital all revealed major troubles as digital-asset prices plunged, triggering a liquidity crunch that ultimately stems from the industry’s interdependence.

In bullish periods, leverage is a way for investors to make bigger profits with less cash, but when the market tanks, those positions quickly unwind. And because it’s crypto, such bets usually involve more than one kind of asset — making contagion across the market even more likely to occur.

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Crypto loans — particularly those in decentralized-finance apps that dispense with intermediaries like banks — often require borrowers to put up more collateral than the loan is worth. But when market prices sour, loans that were once over-collateralized become suddenly at risk of liquidation.

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John Griffin, a finance professor at the University of Texas at Austin, said the rise of crypto prices last year was likely fueled by leveraged speculation, perhaps more so than in the previous crypto winter.

“With interest rates rising as well as lack of trust in leveraged platforms, this deleveraging cycle has the effect of unwinding these prices much more rapidly than they rose,” he said.

Regulators are circling the sector, watching for signs of instability that might threaten their infant plans to rein in crypto. Even rules that were announced in spring have had to change in the wake of Terra’s collapse, with some jurisdictions preparing rules to ease the systemic impact of failed stablecoin systems.

On Monday, bitcoin slumped along with much of the rest of the crypto market, declining from $21,043 to $20,851 in New York. The world’s largest token is down about 35% this month alone.

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Now back around $1 trillion, the crypto market is only marginally above the roughly $830 billion mark it reached in early 2018 before the last winter set in, spurring a downdraft that sent the market to as low as about $100 billion at its depths, according to CoinMarketCap data.

Unlike crypto’s early believers, mass adoption means most investors now view crypto as just another asset class and treat it in much the same way as the rest of their portfolio. That makes crypto prices more correlated to everything else, like technology stocks.

Unfortunately, that doesn’t make most crypto bets any less complex to understand. Though most of the financial world is taking a beating in 2022, the recent crypto market crash was amplified by its experimental and speculative nature, wiping out small-town traders who stuck their life savings in untested projects like Terra with little recourse. And the sector’s hype machine is blaring louder than ever.

Before the previous crypto winter, many startups had used initial coin offerings, or ICOs, to raise capital by issuing their own tokens to investors. They suffered when coin prices came crashing down because they had kept most of their value in that same pool of assets and it worsened when regulators started to crack down on ICOs as akin to offering unregistered securities to investors.

This time around, the funding landscape is vastly different. Many startups born out of the last freeze, such as nonfungible-token and gaming platform Dapper Labs, have sought out venture capital funding as a more traditional route to raising cash.

This means that instead of relying on crypto wealth, some of its biggest players actually have vast reserves of hard currency stored to get them through the blizzard as they work on growing new blockchains or building decentralized media platforms. The recent end to the bull market means they’ve been spending that cash much faster than it’s been coming in.

This month Coinbase Global, Crypto.com, Gemini Trust and BlockFi are among the crypto companies to have announced swaths of layoffs, citing the general macroeconomic downturn for derailing their previously ever-expanding plans. Coinbase, which had hired about 1,200 people this year alone, is now laying off about as many employees in an 18% cut to its workforce.