Riding The Wave News Summary #53
Bitcoin Bounces Back Above $20,000, Ethereum Exceeds $1,000, Celsius token CEL rises 300% in one week amid a GameStop-like 'short squeeze' event, & more
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After a weekend of relentless losses, crypto’s top two coins made marginal recoveries on Sunday, rising above $20,000 and $1,000, respectively.
BTC has recovered by just over 15% in the last 24 hours, rebounding from a shocking low of $17,772 yesterday, to $20,482 at time of writing, according to data from CoinMarketCap. ETH, which plummeted to $898 yesterday, has recovered over 25% in the last day to $1,130 at time of writing.
The price fluctuations mark at least a temporary reprieve from stark downward trajectories over the last week.
By tumbling below $20,000 and $1,000 yesterday, BTC and ETH created market conditions that experts have stated could trigger a wave of forced liquidations.
I think that with the available information it’s unlikely we have found the bottom of this drop. I’m not extremely concerned about contagion between different projects as any forced sales due to loans would mean a short-term buying opportunity but I am concerned about traditional markets. We still haven’t decoupled from them which means if they drop further it’s extremely likely that we could see crypto follow them down.
The price of CEL, the native token of Celsius Network, has almost quadrupled since June 19 in what appears to be a frenzy stirred up by day traders.
Notably, the rally started after PlanC, an independent market analyst, announced a $20 million bounty for anyone who could prove that the Celsius Network suffered a coordinated attack at the hands of a third party, which prompted the crypto lending firm to suspend withdrawals last week.
This has been an interesting situation to see develop with PlanC on Twitter leading most of the action and posting his views on what caused Celsius’ current situation. I personally plan to not add funds to celsius as it’s easy to get burned via situations like this, especially with the broader market being so on edge.
Embattled cryptocurrency lending firm Celsius has asked users to give it more time to stabilize liquidity and operations after the market downturn caused the firm to freeze withdrawals for its customers.
Celsius offers high yields to users who deposit their crypto with the company by lending it out to other institutions to generate a profit.
But last week, the company halted withdrawals for customers due to “extreme market conditions.”
In the past, Celsius said they would never lock withdrawals so this set of actions unsurprisingly shows that if they need to choose between following what they have said publicly and going bankrupt they will switch policy even if it puts users in a difficult position.
Crypto lending platform BlockFi announced that it has secured a $250 million revolving credit facility from FTX, BlockFi CEO Zac Prince said in a tweet on Tuesday, and the company subsequently announced in a press release.
Prince said the move “bolsters our balance sheet and platform strength.” He added that "the proceeds of the credit facility are intended to be contractually subordinate to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed."
This is not the first time FTX CEO Sam Bankman-Fried has stepped in to bail out a major crypto company impacted by the recent market downturn. Last week, crypto broker Voyager Digital (VOYG) secured a revolving line of credit with Bankman-Fried-founded quant trading shop Alameda Research.
Last week, Prince tweeted that BlockFi had also been forced to liquidate a large client that “failed to meet its obligations on an overcollateralized loan.” The statement – which didn’t name a specific client – came amid speculation surrounding the solvency of Three Arrows Capital, a major crypto investment firm. Just a few days earlier, BlockFi announced it was cutting about 20% of its workforce, or roughly 170 jobs.
I would expect FTX to continue investing in this way, they have massive reserves which they can leverage now to establish market dominance and to make investments that will profit during the next bull run.
Disclaimer: The information in this Newsletter is not financial, legal, or tax advice. I only trade on Etoro; if you are reached out to by people requesting you join a group or provide money, it is not me. My only public social media accounts are this Substack page, my Youtube page, my Twitter page, and my Etoro page; any others you see online are not me.