Bitcoin's Down streak Accelerates Significantly

Verge: Babel topples, Celsius Network goes cold, and Three Arrows Capital has a target painted on it

Celsius CEO Alex Mashinsky. - Piaras Ó Mídheach | Sportsfile for Web Summit

Hey Guys,

Today is my off-day but I just couldn’t help myself.

Saturday June 18th, Bitcoin is losing a foothold of 20k, in fact it’s a falling knife today. At the time of writing Bitcoin’s price in USD is down 11% so far today.

Two firms have frozen withdrawals, and a cryptocurrency hedge fund is in trouble. Celsius Network, Babel Finance, and Three Arrows Capital are floundering, and it’s not yet clear how extensive the damage may be.

One thing you can bet on is the damage will accelerate with the drop this weekend. When firms freeze withdrawals the trust credibility really takes a hit.

In Web3 there’s a lot of playing with other people’s money going on, and even crypto fraud at scale in the past two years that have hit record levels.

LinkedIn was a Crypto Fraud Utopia

I’m all for real innovation if I saw seeing it here but this is the 8th Bull market of Bitcoin and this crypto winter is heading into macro economic pressure that are far worse than the last one.

First up is Celsius, which has published a single statement in the week since its freeze: an FAQ that doesn’t tell investors when or if they will get access to their funds. CEO Alex Mashinsky tweeted that the team is working “non stop”. I’m more worried about Tether frankly, it’s shady lack of transparency is a crypto time-bomb (NYT) waiting to happen.

Bitcoin has broken to $18,248, and ether has fallen to $944, as the sell-off in the crypto market accelerates. Mortgage data is showing how potentially painful the looming recession could be as consumer sentiment runs the risks of plummeting to all-time lows, as peak inflation is realistically not in June or even July as the price of oil is set to rise.

The world’s two most popular cryptocurrencies are down more than 35% in the past week, as both breach symbolic price barriers. - CNBC

There are simply so many train wrecks waiting to happen here.

The Bill Gates “greater fool theory” position on Crypto is about as reliable as people betting against Europe’s economy or shorting Tesla, all very predictable if you can get the timing right. Volatility is incredibly profitable, up or down it doesn’t matter.

Microsoft co-founder Bill Gates said he thinks cryptocurrencies and NFTs are “100% based on greater fool theory.” While many companies have promised NFT-integration, Microsoft has not been among them inspite of having the inside track on both the Corporate Metaverse and the Gaming Metaverse now in 2022.

Meanwhile, in Hong Kong, another crypto lender named Babel Finance has announced its own freeze on withdrawals and redemptions, claiming it’s “facing unusual liquidity pressures.” This upcoming week of the June 21st is going to be a great reckoning for crypto and equity markets. This is the moment the data starts to confirm fears of a recession all over the world, as if simultaneously.

Web3’s constant resets due to Bitcoin’s price volatility means its nascent DeFi and good products have a harder time of making steady and sustainable progress. The 8th crypto winter in 13-years? That’s not an optimal ratio for real progress or scalability. It’s clear now in 2022, that crypto won’t be the next form of digital money or digital cash.

There’s so much liquidity still in the system with $Trillions of “helicopter money” that can be taken off the table in a downturn. This means significant volatility ahead is probable. To say that carnage in the crypto market is partly to do with pressure from macroeconomic forces, including spiraling inflation and a succession of Fed rate hikes is both an understatement and and oversimplification. Reality is more complicated than not Fighting the Fed when the Fed will have barely any real grip on inflation. This will cause some measure of panic.

When we haven’t had a recession since 2008, essentially skipping one, this one could be more painful in a high inflation, slow growth and high interest rate environment. To say that we have too many zombie companies walking around would be an understatement. The oil industry and Saudi Arabi refusing to produce more means peak inflation is nowhere to be seen and this will get worse before they get better.

If you want to support the channel, I cannot continue to write without community support.

Real Solvency Meltdowns Ahead for Crypto and Web3

Let’s be honest, the pain in the crypto space is going to be immense. The market cap of crypto has fallen below $1 trillion, down from $3 trillion at its peak in Nov. 2021. It could easily just be half-way though, if you know how these things work.

It’s bye bye June for Bitcoin.

The sell-off in cryptocurrencies comes as investors rotate out of risky assets. The problem is guidance is poor, earnings is heading down and the cost of capital could be entering a new paradigm just about the worst condition possible for crypto. Blockchain, DeFi and Bitcoin will live to see another day, but today is a day for the history books.

Bitcoin is down 36% in the last month and it “community” has been hit even harder.

Another year, another Bitcoin collapse. At least, that’s what it looks like from the outside. I speculate on markets but not crypto, the level of volatility is different. Bitcoin is about to fall back below the highs of its previous halving cycle peak. That’s something that’s never happened before and matters for the investment case in crypto. Consider what that means, either privately or at the dinner table.

Bitcoin is about to fall back below the highs of its previous halving cycle peak. That’s something that’s never happened before and matters for the investment case in crypto. Consider what that means, either privately or at the dinner table.

I’ll see you on the flip side.

Historically speaking (Bloomberg):

• Every four years or so, the amount of crypto that miners receive for solving the algorithmic problems that allow them to record transactions on the blockchain is halved.

• Every time this has happened, it triggered a parabolic rally. Every successive peak was higher than the last, and when a new peak was put in place, prices never revisited the lows again. 

So the Fed’s QE to QT just heightens the volatility even further, and a slowing economy means everyone will prefer to have some dry power do buy the ultimate dip. But the correction to the mean could be the start of a new cycle, and the Fed’s miscalculation could impact a generation. There’s more insanity out there this time. More internal and external conflict, less trust in Capitalism and more civil unrest.

Luna, Celsius and others are just the tip of the iceberg. In the chaos, Celsius, a major crypto staking and lending firm, shocked the market when it announced that all withdrawals, swaps and transfers between accounts have been paused due to “extreme market conditions.” The ripples of Bitcoin volatility works both ways, just as consumers will be suffering maximum pain.

“Expensive digital images of monkeys” will “improve the world immensely,” Gates joked, referring to Bored Ape NFTs. An old guard and a new guard are fighter over something that’s entirely made-up, the rise of a dystopian synthetic internet on all sides. Not a great look for the future if you ask me.

When profits are your life’s goal and national mantra and Bitcoin becomes a religion, what actually happens to your society?

Thanks for reading!