The crypto crash.
Bitcoin continues its remarkable tumble as investors across the sector brace for what's
to come.
Welcome to The Daily Forkast June 14th, 2022.
I'm Forkast's Joel Flynn.
It's been a dark day for markets meltdown has followed the suspension of withdrawals
from Celsius.
There are big questions about what could happen next.
We've got the latest for you on what's been happening from Asia to the world.
Join thousands of NFT traders who already start their day on CryptoSlam.
Double digit price drops.
Talks about margin calls and investors locked out of their accounts.
It has been a rollicking 24 hours on the blockchain as markets have hit the panic button, a move
by Celsius to pause.
Withdrawals prompted much of that yesterday.
The company cited extreme conditions.
Afterwards, investors dumped crypto assets, causing Bitcoin to plummet.
Its value fell to less than US$22,000 by noon Hong Kong time, its lowest level in two years.
All of this ahead of a 75 basis point jump in lending rates expected from the US Federal
Reserve tomorrow.
The Fed of course trying to fight off runaway inflation, but that could yet cause more pain
for markets and for crypto investors.
Another casualty was the USDD, the Tron network's algorithmic stablecoin lost its US dollar
parity yesterday, falling below the 98 US cents.
Mark However, Tron's founder Justin Sun stepped in to try and avert fears of another Terra
Luna style collapse Forkast's Danny Park reports.
Sun tweeted yesterday that he would set up a US$2 billion fund to support the TRON Projects
USDD Stablecoin and fight against short sellers.
The Tron DAO Reserve followed up saying it had received $700 million worth of USDC to
support the USDD peg.
Fears over reserves were sparked as the USD uses an algorithmic mechanism similar to that
of the Terra Stablecoin, which collapsed last month.
However, one expert told Forkast Stablecoin should not all be tarred with the same brush.
We can't just look at this one project and say, Oh, that's where there is an issue now.
And even Luna is not the one instigator that has sent the market tumbling.
So I guess, yes, there is some hesitancy around algorithmic stablecoins right now.
I would not say that there is a kind of overall skepticism around Stablecoins.
Caselin says that while there are some similarities between Tron's founder Justin Sun and Terra's
Do Kwon, there's also a significant difference.
They have some similarities in loudness and kind of the noise they make in the market.
But I think Justin Sun may have more of a positive track record behind him.
The USDD has a smaller market cap and it seems that TRON is not intent on kind of over raising
that too much in unhealthy ways.
According to Tron DAO, the Collateralization rate of USD was at almost 250% Tuesday lunchtime
in Asia.
However, at the same time, the USDD had yet to regain parity with the dollar trading at
a little under 99 US cents.
The total value Locked or TVL in Tron DeFi has fallen to around US$4.7 billion USD, while
the TVL for the broader DeFi market has sunk to its lowest level since 2021.
For Forkast, I'm Danny Park.
Well, among those being hardest hit by the sell off is MicroStrategy.
The business intelligence firm has lost around US$1 billion from the value of its Bitcoin
portfolio.
It holds nearly 130,000 BTC thanks to purchases driven by founder Michael Saylor.
Microstrategy shares were down over 25% following yesterday's sell off leading losses by others
like Marathon Riot and Coinbase.
Saylor's denied speculation about margin calls.
He said problems would only occur if Bitcoin hits US$3,500.
Meanwhile, an update from Binance withdrawals on the Bitcoin network have resumed after
a temporary pause on Monday.
In a statement, the world's largest crypto exchange said it was still working to process
pending Bitcoin withdrawals.
It added some users would need to resubmit requests.
Binance's CEO Changpeng Zhao initially tweeted that a stuck transaction had caused the backlog,
which was expected to be fixed within about 30 minutes.
He later admitted the fix was taking longer than expected with everything happening at
the moment.
Do make sure you head to Forkast.News for the latest updates and more detail on what
it all means.
All right.
So let's get some more analysis and insight on this market meltdown with Benjamin Stani,
business development and sales director at Matrixport.
Benjamin, thanks for talking to us.
I hope you're well.
Oh, I'm very well.
Thank you.
Listen, crypto markets, as I said, reeling, hitting lows we've not seen for quite some
time.
Can I just get your general reaction to what's going on and your opinion on whether we're
anything close to the bottom yet?
It's very hard to call where the bottom is.
I think what makes sense is looking at what factors are dragging us lower.
And I think there's two major factors here.
The first you mentioned is on the macro side of things, we've had basically our risk asset
is short term dependent on whatever the Fed does.
And the latest inflation print certainly spooked markets.
So correlations with equity markets and other risk assets are at an all time highs.
And I've seen some of banks called even for 75 basis points hike at the next Fed meeting.
So obviously that's very hawkish and we'll have impact on our asset class.
I think the second factor is stress within crypto.
We've seen that first starting with the Luna collapse and now we're starting to see that
spread into other major crypto lenders that have come under pressure and had to either
raise liquidity at painful valuations or in some cases even have to halt withdrawals,
which is causing, of course, even further stress.
Yeah.
Look, Benjamin, in terms of risk, how effectively do you think crypto markets are pricing all
of this in in any sense?
Do you get the idea that we're perhaps seeing a maturing of the market in the way that we're
seeing participants behave and potentially adjust to this situation?
Yes, you could say that in a way our industry is becoming more mature and this year is predominantly
a liquidity issue.
I'll take the example of our stage because a lot of discussions have been circling around
that one.
Celsius - the player that you've mentioned before who also halted withdrawals for their
users, they had a significant jump in STTH.
In a nutshell, how it works is you can deposit Ethereum into a protocol called Lido and they
will give you a liquid state version of that Ethereum on the way in, it's one on one.
The problem here is on the way out.
It's there's no way currently that you can undertake your Etherium that will only be
possible once if you transitioned successfully to proof of stake and implement on staking
mechanisms.
So in a liquidity issue where we having now a player that needs liquidity will have to
sell this stage at a discount and that's what we're seeing in the market already happening.
Yeah, we're looking at some really interesting potential resistance levels now in terms of
positions.
What are you guys talking to your clients about?
At what point do you start to see people considering getting back into the market?
Where do we see a market cap begin to find some sort of support?
It's very hard to pin down any levels here because we've broken through many important
resistance levels.
And it's at the moment what what's going on is there's a major liquidity stress, as I've
said.
So you don't know which players are solvent.
You don't know how long this this drag on liquidity will continue.
And so I expect markets continue to be very volatile in the near term.
And for people who have not experienced the crypto bear market in the past, these markets
can can come very sharp and can last much longer than you would expect.
So I would advise I would strongly advise anybody investing in crypto to be extremely
careful with leverage.
I always say that, but especially around these times and invest in assets, that you have
a very strong view that they will have value in the long run and do your dollar cost averaging
into these assets.
All right, Benjamin, we'll leave it there.
Thanks very much for your insight.
Thank you very much.
All right.
That's your Daily Forkast from Asia to the world.
For more on what's happening right now on the blockchain, please make sure you head
to Forkast.News.
Do follow us on Twitter as well @Forkast_News.
But until next time, I'm Forkast's Joel Flynn.
I'll see you then.