Secret stock market or private investment market is collapsing today i want to talk about about why this is disastrous for these big hedge funds for those major banks and the overall economy. But at the same time is brilliant for the amc squeeze so stay tuned and let's make some money and now i'm gonna dive straight in with the key information. So elliott tweeted saying the startup market has its first big down. Round amid the startup bust error klanner is down from 45 billion dollars in 2021 to only 65 billion in 2022.

The article from the wall street. Journal says karna is in talks to raise fresh cash at a slashed 65 billion dollar valuation. It says the deal would be a huge come down for the company which investors valued at. 456 billion dollars.

In 2021 a valuation falling from. 456 billion down to only 65. Billion. Is a drop of 85 percent year over year.

Klanner has called this a humbling come down and a testament to the punishing environment facing startup companies not just crypto companies specifically. But basically all start up tech companies. This is the sweden based specialty lending. An online payment provider is negotiating to raise around 650 million dollars mostly from existing investors led by sequoia capital.

But as i said. It's not just crypto companies that are struggling. It's basically all startup tech companies and all of those unicorn companies out there this article from crunchbase says. It's a buyer's market for private company.

Shares they've said the us. Stock market has officially dipped into bear market territory largely driven by big declines for tech stocks this year. That dip has rippled effects in the private markets. Too.

It says a huge influx of sellers has signed up for the secondary markets. Platform forged global in fact forge has never had as many sellers on the platform as it does now the disconnect in supply and demand has resulted in a nine percent decline in prices of private companies trading on the platform between the fourth quarter of 2021 and the first quarter of 2022 and the reason. Why they're calling this a buyer's market is because sellers are rushing in to unload shares and some companies aren't selling for the premiums. They were even a few months ago.

And therefore if you're looking to buy equity in private companies now may be the time as you can get a massive massive steal. Many of these companies like klana are down 85 year over year. And therefore. If you are a buyer at the moment you are getting a discount.

But i don't think these private companies are finished falling just yet. But you may say tom why is the falling valuations of private companies bad for hedge funds bad for major banks and bad for the overall economy. Now obviously. Private companies are very very different to public companies with a public company listed on a stock exchange.

The valuation of that company is updated practically every single second. As soon as some shares are sold or some shares have been purchased. But obviously with private companies. The valuations are updated much more sporadically maybe they're valued once a year maybe they're valued only when they try and raise capital or maybe they're valued every few months.

But this is obviously very very dangerous for those big funds invested heavily into private companies that have also borrowed money against those valuations. As mark coder. Says. If tire global actually marked their privates properly.

He believes they're probably down at least 60 percent this year. If not even more so far a number of these large hedge funds are still showing massive portfolio sizes. Because they haven't yet updated. The valuations of their private companies.

If they do update those valuations they'll likely end up being margin called practically on a spot. So i wanted to explain briefly how that all works back in 2020. You would have had a number of small funds maybe like our chaos capital management. Tiger.

Global melvin capital. Many other hedge funds that maybe. Only had a fund size of say 10 billion dollars. And guys.

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But all major startups like clana and practically any other tech and crypto startup fast forward to 2021 a number of those companies absolutely rocketed in valuation. We had the meme stock craze. We had growth stocks going crazy as well and a number of those funds probably shot from small valuations of 10 billion dollars to massive valuations of a hundred billion dollars. If not even larger now a number of those funds would have wanted to keep the music going they would have wanted to make even more money and therefore they've taken out loans of say 50 billion dollars from major banks to continue funding their investments.

They've then taken that 50 billion dollars from those major banks maybe they've bought some more tech startups like blockfi maybe they're going heavily over leveraged on short positions on heavily shorted stocks like amc or maybe they're even just buying regular blue chip tech stocks their initial fund size was a hundred billion dollars they've borrowed 50 billion dollars and bought an additional 50 billion dollars worth of investments and therefore they've got a total fund size or total fund assets of 150 billion dollars. But you have to remember that of this 150 billion dollars 50 billion dollars of it is borrowed from major banks and the other 100 billion dollars. Is basically entirely valued on tech unicorns tech startups and crypto exchanges or crypto companies like block five voyager digital and a number of others right now in 2022. The market is obviously crashing recession is upon us or recession is at least imminent therefore.

A number of these funds are down. 90. Just like i spoke about in my video yesterday that means these funds that last year were worth 150 billion dollars. And now only worth 15 billion dollars.

And the biggest kicker of it all they still have that 50 billion dollar loan that they've borrowed from bank of america credit suisse jpmorgan or a number of other major banks now this is just one individual example. There's going to be tens. If not hundreds of these funds that did blow up massively borrowed money against their valuations. And proceeded to practically lose.

It all therefore. It's not just one fund. Owing these major banks 50 billion dollars. There's tens if not hundreds of funds that own massive amounts to these major banks.

But they can't repay these 50 billion dollar loans 100 billion loans 500 billion loans because their assets are only worth 15 billion. Dollars 10 billion. Dollars. Maybe even only a singular billion dollars.

Therefore. You've got all of these funds that are down 90. That are practically insolvent and you've got billions and billions of dollars maybe even trillions of dollars in losses that are just about to be suffered by these major banks and the only thing. That's so far stopping this wave of liquidations and the implosion of major banks and major hedge funds is the fact that these private valuations haven't yet been updated as soon as these valuations do get updated.

These funds will have to revalue their investments. Lose giant chunks of their portfolio. And they will end up being margin called now what we're waiting for is these tech unicorns. These tech startups and these crypto companies to start running out of cash to the point.

Where they need to raise additional cash obviously blockfire ran out of cash. A few weeks ago and needed to borrow 250 million dollars in cash from ftx that dropped its valuation down to 500 million dollars from a previous valuation of 5 billion. When these companies run out of money and need to do a capital raise and they start trying to raise money that's when these hedge funds have to update. Their valuations in companies.

Like klarner block fi. And many others. So we're effectively just waiting for these startups to start running out of cash to the point. Where they need to do an additional placing to raise more cash and then all of these hedge funds have to mark their private valuations.

Appropriately and accurately and obviously as more and more companies run out of cash need to raise more that's more and more valuations that need to be corrected by these funds effectively bringing them closer and closer to that margin called territory and that's why we're seeing spreads on credit default swaps of jp morgan goldman sachs morgan stanley citigroup wells fargo credit suisse bank of america and more approaching fresh two year highs on thursday not only are these big hedge funds showing additional signs of going under and going bankrupt. But also these major banks are showing these same signs as well and that's why their credit default swaps are spiking and again something that's going to push us even closer to this liquidation point is this tweet from altcoin gordon and from the altcoin hub gordon says another day another exchange in a liquidity crisis. The coinhub tweeted setting vauld. A kyc compliant crypto exchange operating in india has again suspended all withdrawals deposits and trading.

Citing financial challenges. This has got to be like the third fourth fifth maybe even sixth crypto exchange. Which has gone under in the last few weeks. And is suspended withdrawals deposits and all trading you may say tom.

I haven't really heard of vaude before perhaps because it's in india. But vauld was actually financed by peter thiel. Pantera and by coinbase as well so again. This is more exchanges like coinbase and like ftx that are losing hundreds of millions of dollars as their own investments in companies.

Like vault are continuing to implode that's basically a few hundred million dollars or whatever. It is that coinbase. Now doesn't have it decreases their assets and pushes coinbase themselves closer and closer to bankruptcy borders. Issued.

A corporate statement. Saying. The board management wishes to inform that we are facing financial challenges despite our best efforts. They said.

This is due to a combination of circumstances such as the volatile market conditions. The financial difficulties of our key business partners. Inevitably affecting us and the current market climber and that's led to significant amounts of customer withdrawals in excess of 1977. Million dollars since the 12th of june.

So in what two or three weeks customers have withdrawn nearly 200 million dollars directly from vault. More and more bankruptcies in the crypto space is going to impact the price of cryptocurrency itself. Obviously causing bitcoin to fall causing more and more and more liquidity issues in those hedge funds that actually invest in bitcoin. And again.

As more hedge. Funds are facing those liquidity issues. They're going to be forced to sell off their crypto assets and forced to sell off their long stocks further crashing the stock market and obviously as the stock market crashes further. These funds that are shorting amc with a small portion of their fund with their overall larger portion of their fund still long on the overall market will end up facing liquidity issues themselves being again forced to sell off their long positions and close out of their short positions.

It seems like every single day. Now. We're seeing a new hedge fund. Going bankrupt or a new crypto company going bankrupt.

That is impacting on the crypto price is impacting on the stock market and day by day is pushing us one step closer to that amc squeeze. But guys be sure to let me know what you think down in the comments. Below and as always guys be sure to ding that notification bell. Because that way you'll be alerted when i upload a new video cheers.