Shakeout continues as the price of Bitcoin shuffles sideways
The week in review
with Jason Deane
While Bitcoin’s price hasn’t really moved this week, the shakeout across the industry is continuing. Voyager and Three Arrows Capital had already collapsed as reported earlier, but this week Celsius filed for Chapter 11 bankruptcy after suspending all withdrawals a few weeks ago.
Of course filing for any sort of bankruptcy really doesn’t fill users and investors with confidence, but Chapter 11 is usually used where the company has a chance of successfully completing the restructuring process and coming out the other side. It seems Celsius might just do it.
Over the last couple of weeks, the company has paid by $718m to various protocols including Maker, Aave and Compound, releasing over a billion dollars of collateral in wBTC and stETH back to Celsius.
This all sounds very complicated – and it is – but it also gives an insight into just how interconnected some of the industry’s major players are.
For example, Three Arrows Capital failed to meet a margin call from BlockFi and its positions were liquidated. This meant that it defaulted on a loan from Voyager, adding pressure to the already embattled organisation and ending in its filing for bankruptcy under Chapter 15. Court documents revealed that Voyager owed Alameda Research $75m, but Alameda also owed Voyager $377m, which, indecently, owns nine per cent of the former.
Phew. I’m glad I’m not the one sorting all that out.
In my view, there is more collateral damage to come, partly because of over leveraged positions and over ambitious lending, but also because so much of this industry is still experimental. Some of this stuff simply doesn’t work and some things we can only seem to collectively learn the hard way.
Bull markets may encourage crazy risk taking, but bear markets reveal what actually holds up.
Of course, the irony that Mt Gox’s Rehabilitation Trustee announced this week that it was preparing to make repayments to investors after the disastrous 2014 collapse hasn’t been lost on me or, I suspect, many others. It seems just as we come close to sorting out one mess, we go and create another one.
But as messy as this all may appear to be, spare a thought for the legacy financial system which is in a far, far worse state.
This week US inflation hit 9.1 per cent, a rate last seen in the early 1980s, matching the current UK rate. The EU is at 8.8 per cent, Belgium at 9.65 per cent and Spain at 10.2 per cent. In fact, there are now more than 35 countries with an inflation rate of over 15 per cent, including Syria, Venezuela, Zimbabwe, Sudan and Lebanon with rates well over 100 per cent.
But, as bleak as it all seems, it’s worth remembering that we are living through one of the most challenging and exciting times in human history. The transition to the next generation of finance will be complicated, painful and full of mistakes, but ultimately Bitcoin’s fundamentals will usher in a new era of inclusion and free trade.
And that’s such an important thing to remember, I’m going to use Joe Biden’s immortal words from his July 8 speech to emphasise the point: “End of quote. Repeat the Line”
Have a great weekend!
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Yesterday’s Crypto AM Daily in association with Luno
In the markets
The Bitcoin economy
*Definitions and insights can be found at https://bytetree.com/research
Total crypto market cap
The total capitalisation of the entire cryptocurrency market at time of writing is currently $933 billion.
What Bitcoin did yesterday
We closed yesterday, July 14 2022, at a price of $20,569.92. The daily high yesterday was $20,789.89 and the daily low was $19,689.26.
Bitcoin market capitalisation
Bitcoin’s market capitalisation at time of writing is $397 billion. To put it into context, the market cap of gold is $11.219 trillion and Tesla is $740.95 billion.
Bitcoin volume
The total spot trading volume reported by all exchanges over the last 24 hours was $38,468 billion. High volumes can indicate that a significant price movement has stronger support and is more likely to be sustained.
Volatility
The price volatility of Bitcoin over the last 30 days is 57.68%.
Fear and Greed Index
Market sentiment today is 15, in Extreme Fear.
Bitcoin’s market dominance
Bitcoin’s market dominance today is 43.63. Its lowest ever recorded dominance was 37.09 on January 1 2018.
Relative Strength Index (RSI)
The daily RSI is currently 49.74. Values of 70 or above indicate that an asset is becoming overbought and may be primed for a trend reversal or experience a correction in price – an RSI reading of 30 or below indicates an oversold or undervalued condition.
Convince your Nan: Soundbite of the day
“Everyone has got to believe in something. Why not believe in something verifiable and unforgeable.”
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Crypto AM: Events
For those of you who missed the Crypto AM DeFi & Digital Inclusion online summit 2021 – you can now watch the event in two parts via YouTube
Part One
https://www.youtube.com/watch?v=dvqNMNZTIDE
Part Two
https://www.youtube.com/watch?v=WXhX_-Tr5j0
Cautionary Notes
It’s definitely tempting to get swept up in the excitement, but please heed these words of caution: Do your own research, only invest what you can afford, and make good decisions. The indicators contained in this article will hopefully help in this. Remember though, the content of this article is for information purposes only and is not investment advice or any form of recommendation or invitation. Morning Wire, Crypto AM and Luno always advise you to obtain your own independent financial advice before investing or trading in cryptocurrency.
All information is correct as of 08:00 BST