A pattern of explosions of volatility in bitcoin, then nothing

A pattern of explosions of volatility in bitcoin, then nothing

Generally in markets, volatility breeds volatility.

In bitcoin lately though, there’s a period of huge moves followed by periods of relative dormancy. For this entire week, the range has been $19,586 to $21,696.

For a normal asset, that 9.7% range is wide but it’s miniscule compared to the recent norm in BTC. It’s a tough one to understand and what makes it especially confounding is that something similar happened in April and May.

bitcoin sideways

I suspect there’s some kind of natural stabilization mechanism in play here, or it’s a strange coincidence.

In any case, I think the trade here now is to wait for a clear break of the range and go with it. That’s a bit tough to do on the downside because of that quick spike low on the 3AC liquidation.

Bitcoin’s performance points to a weak risk appetite

Bitcoin’s performance points to a weak risk appetite

Bitcoin rose 2.9% in the past 24 hours to $20.9K. Ethereum
added 5.5% to $1140, while the top 10 altcoins growth ranged from 1.1% (Doge)
to 11.5% (XRP).

Total crypto market capitalisation, according to
CoinMarketCap, rose 3.1% to $929bn over 24 hours. Bitcoin’s dominance index
lost 0.2 points to 42.9%. The cryptocurrency fear and greed index remained at
11 points (“extreme fear”) for the third day.

Bitcoin rebounded from the previous day’s decline on Thursday
amid rising US stock indices. The first cryptocurrency has not yet managed to
advance above $21K. Markets must guess whether we see crypto market weakness
compared to equities or whether BTC works as a leading indicator, indicating
that the rebound in equities is false.

Famous investor Mark Mobius called bitcoin a leading
indicator of stock market sentiment. In his view, now is the time to buy stocks
as bitcoin investors are still talking about buying it on the downside.

btc

China’s Economic Daily warned local investors that in the
future, when market confidence collapses or when sovereign countries declare
BTC illegal, it will return to its original value, which is zero.

Changpeng Zhao, CEO of cryptocurrency exchange Binance,
believes that after the current collapse, bitcoin may not surpass its previous
high of $69,000 until 2024. Crypto winter could last until the next bitcoin
halving in 2024, the “Dvision Network” believes.

According to KPMG, institutional investors show significant
interest in asset tokenisation, NFTs and meta-currencies. Citibank and
Switzerland-based METACO are launching a storage service for cryptocurrencies
amid the growing digitalisation of traditional investment assets.

This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.

CoinFlex suspends withdrawals

CoinFlex suspends withdrawals

Bitcoin

The fallout from the downfall of the 3AC crypto hedge fund continues to swallow up the industry.

CoinFLEX, which bills itself as “the home of cypto yield” is suspending withdrawals temporarily.

“Due to extreme market conditions last week & continued uncertainty
involving a counterparty, today we are announcing that we are pausing
all withdrawals. We fully expect to resume withdrawals in a better
position as soon as possible. We will fully communicate with you as we
find out more,” the company said in a blog post.

A picture is beginning to emerge of 3AC that suggests it tapped loans far in excess of capital to make a leveraged bet on bitcoin. As the bet began to go back, it sought to borrow even more and may have crossed some red lines in doing so.

The problem now is that users everywhere are counseling each other to pull out of crypto investments and that is sapping liquidity.

This kind of thing can become a self-fulfilling spiral. Last week, it was reported that Sam Bankman-Fried tried to take steps to shore up the whole industry but it’s one man trying to hold back a flood.

Bitcoin continues to find bids above $20,000 but every headline like this is a headwind. I have to imagine that the yield farming business is dead as well and that presents a long-term impairment to crypto.

On the other hand, there’s a line of thinking that if all the crypto scams are cleaned up, more money will be available flow into ‘safe’ bitcoin.

Crypto Platform Voyager Digital Limits Withdrawals After Getting Alameda Lifeline

Crypto Platform Voyager Digital Limits Withdrawals After Getting Alameda Lifeline

Crypto Platform Voyager Digital Limits Withdrawals After Getting Alameda Lifeline
© Reuters

By Geoffrey Smith 

Investing.com — Sam Bankman-Fried’s clean-up of the mess caused by the collapse of hedge fund 3 Arrows Capital continues apace.

Canadian-based crypto investment platform Voyager Digital said it will limit daily customer withdrawals, under the terms of a $200 million bailout it secured from the FTX CEO’s hedge fund on Thursday.

Alameda Research, through which Bankman-Fried manages a portfolio of crypto investments, is the largest shareholder of Voyager with an 11.86% stake. On Wednesday, Voyager confirmed it had secured a revolving credit facility with Alameda for $200 million in cash and 15,000 (worth another $30 million at this week’s prices) to backstop its customers’ assets, after the collapse of 3AC left it facing massive losses. 

Voyager’s exposure to 3AC consists of 15,250 Bitcoin and $350 million , a stablecoin pegged 1:1 to the dollar. For comparison, it has only $152 million in unrestricted cash.

Hong Kong-based 3AC said last week it has hired restructuring advisers after being badly wrongfooted by the collapse of the Terra Luna network and sharp declines in other alt-coins this year. Its collapse has exposed a string of risk management failures across other crypto lending and investment platforms, most of which have struggled to cope with redemption requests that have surged as cryptocurrency prices declined in recent weeks. 

Voyager, which boasted over 4 million unique users and some $5.8 billion in assets on its platform in its latest results, said it intends to pursue 3AC for what it’s owed but “is unable to assess at this point the amount it will be able to recover.”

Effective immediately, Voyager will limit daily withdrawals to the equivalent of $10,000, down from $25,000 previously. That still represents a greater degree of liquidity than that enjoyed by customers of various other crypto lending platforms, including Celsius Network, where all withdrawals have been suspended now for 11 days.

The limits reflect the constraints imposed upon Voyager under the terms of its bailout. Alameda has insisted that Voyager draw down no more than $75 million over any rolling 30-day period, and that its debt must be limited to approximately 25% of customer assets on the platform, less $500 million. It also insisted that Voyager find additional sources of funding within 12 months.

Bankman-Fried had intervened on Thursday to bail out BlockFi, another digital asset platform reportedly caught out by 3AC’s collapse, also structured as a revolving credit facility of similar size to Voyager’s.  

Bitcoin may be near the bottom but not yet ready to rise

Bitcoin may be near the bottom but not yet ready to rise

The tug of
war in Bitcoin near the psychologically important $20K continues. After losing
4.7% to $19.9K on Wednesday, the first cryptocurrency returned to $20.4K on
Thursday morning. Ethereum is down 1.2% to $1085 in 24 hours, with the top 10
altcoins trending from a 2% drop (Tron) to a 3% rise (Solana).

Total crypto
market capitalisation, according to CoinMarketCap, was unchanged overnight,
remaining at $900bn. Bitcoin’s dominance index fell 0.4 points to 43.1%.]

By Thursday,
the Cryptocurrency Fear and Greed Index stood at 11 points (“extreme fear”).

Ian Harnett,
a co-founder of Absolute Strategy Research, has suggested that bitcoin will
collapse to $13K this year, as it is characterised by a drop of 80% from the
historic highs it reached.

Arcane
Research noted that in 2013 and 2017, BTC fell 85% and 84%. If history repeats,
bitcoin’s downside potential persists to the $10,350 mark.

However, we
note that in previous bullish cycles, the strengthening of BTCUSD has been many
times stronger. For example, in 2013, it was more than 90 times. In 2017, it
was 20 times, while in a year-long growth cycle through the highs of 2021, we
saw “only” a tenfold increase in price.

btc

In our view,
it is much more reliable to estimate that Bitcoin finds a long-term bottom near
the highs of the previous 4-year cycle, where the first cryptocurrency has
already rolled back.

Even so, it
may not be the best time to buy, as it may take considerable time before the
crypto market digests the recent turmoil and enters a new phase of sustained
demand from broad segments of investors, not just stressed asset hunters.

The ECB
chief has called for regulating the cryptocurrency lending sector amid growing
activity on crypto lending platforms and problems with Celsius and Finblox.

SEC
Commissioner Esther Pearce believes that a bearish crypto market would benefit
the industry and create a more sustainable foundation for its development.

Tesla CEO
Elon Musk has said that he has never encouraged anyone to invest in
cryptocurrencies and all accusations of him promoting a “Dogecoin pyramid
scheme” are unfounded. Musk has recently sued for advertising DOGE for $258bn.

Tether, the
issuer of the largest USDT stablecoin by capitalisation, announced the release
of a GBPT “stablecoin” pegged to sterling.

This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.

Bitcoin falls back through $20,000. What’s next

Bitcoin falls back through $20,000. What’s next

Bitcoin is through the Asian lows and $20,000 to the worst levels since Monday.

The crypto held up well in the early going even as US equities sunk but it’s now leading broader markets lower as the mood sours. At times, bitcoin has been a leading indicator of intraday sentiment.

Technically, this looks like a head-and-shoulders pattern with a target near $18,500.

Bitcoin hourly

The market is carefully watching for ongoing signs of strain in the alt space, among brokers and in the dangerous crypto lending space. Solana is under some pressure today after a five-day rebound and the Solend fiasco.

Ethereum is down $62 today to $1059. It fell as low as $879 on the weekend but has bounced back. Still, before that it had fallen in a straight line from $1800 so the bounce isn’t impressive and points to lurking sellers.

The space is having a crisis of confidence and there are even signs of a civil war. Bitcoin evangelist Michael Saylor yesterday tore into alt currencies and crypto lending.

““What you have is a $400 billion cloud of opaque, unregistered securities trading without full and fair disclosure, and they are all cross-collateralized with Bitcoin,” he told Fortune.

He argued that bitcoin is being dragged down by the mess of 19,000 cryptos and some bad actors within the space, including conflicts in leverage trading.

“The crypto exchanges, offshore and onshore, are unregistered, unregulated and offer 20x leverage, they don’t have mature Chinese walls,” Saylor said.

GIC, B Capital Lead $150M Funding for Crypto Platform FalconX

GIC, B Capital Lead $150M Funding for Crypto Platform FalconX

GIC, B Capital Lead $150M Funding for Crypto Platform FalconX

By Geoffrey Smith 

Investing.com — The crypto winter hasn’t – yet – stopped the flow of institutional money into the digital currency space.

Crypto platform FalconX, which specializes in offering digital asset-themed services to institutional investors, said on Wednesday it had attracted $150 million in fresh capital, through a Series D fundraising led by Singapore’s sovereign wealth fund GIC and B Capital at a valuation of $8 billion.

Hedge funds Tiger Global, Thoma Bravo, Wellington Management, and Adams Street Partners also participated.

The valuation is more than double what FalconX achieved in its last funding round 10 months ago, when it raised $210 million at a valuation of $3.75 billion. As such, it stands out starkly from a trend of falling cryptocurrencies and collapsing lender networks that have dominated news in the space for the last few weeks. It suggests sustained institutional interest in an asset class despite the difficult short-term outlook for crypto adoption due to the rising trend in global interest rates.

FalconX said in a statement the fundraising came after its best ever quarter for signing up new customers “despite the volatile public and private markets.”

“This growth is driven by demand from a diverse range of institutional market customers who are looking for a reliable execution platform in volatile crypto markets, capital efficiency to scale returns, and strong risk management,” it said. 

FalconX, which recently became the first crypto-focused broker to register with the U.S. Commodity Futures Trading Commission, styles itself as a prime brokerage for institutional accounts which doesn’t itself take on market risk. 

“We’re not in conflict with our clients and their trading strategies,” CEO and founder Raghu Yarlagadda said in the statement. “In light of recent market conditions, this is extremely valuable to our clients who demand a reliable market infrastructure provider.”

It nonetheless acts as a key liquidity provider to retail-focused platforms such as Apex Crypto.

Coinbase Falls as Analyst Says Volumes are Drying Up Amid Crypto Fatigue

Coinbase Falls as Analyst Says Volumes are Drying Up Amid Crypto Fatigue

Coinbase Falls as Analyst Says Volumes are Drying Up Amid Crypto Fatigue
© Reuters

By Investing.com Staff

Coinbase (NASDAQ:) shares are down 7% in pre-open trading Wednesday following cautious comments from Mizuho Securities, competitive pressures from Binance, and renewed weakness in .

In a new note to clients today, Mizuho analyst Dan Dolev said recent trading patterns on Coinbase are pointing to potential crypto fatigue.

The analyst highlights that the average daily trading volume on the COIN platform on Bitcoin down-days was 15% higher than volumes on Bitcoin up-days. In recent months, however, down-day volumes are 42% higher than up-days, or nearly 3x vs. the prior ratio.

Dolev said investors should not get excited about the recent spike in volume. “We encourage investors to tame expectations as the rise in volumes during early June appears to be fading… COIN is still tracking 10-15% below 2Q consensus and ~30% below 1Q level,” he commented.

On the competitive front, Binance starts offering zero-fee trading in the U.S..

In addition to the above concerns, after a recent bounce off multi-year lows, Bitcoin prices are heading back to $20,000.

Bitcoin Is Leading Indicator of Stock-Market Bottom, Mobius Says

Bitcoin Is Leading Indicator of Stock-Market Bottom, Mobius Says

Bitcoin Is Leading Indicator of Stock-Market Bottom, Mobius Says
© Reuters

(Bloomberg) — If you’re a stock trader, you should probably be turning your attention to cryptocurrencies right about now.

That’s according to Mark Mobius, who co-founded Mobius Capital Partners after spending more than three decades at Franklin Templeton Investments. 

“Cryptocurrencies are a measure of investor sentiment,” he said in an interview Wednesday. “Bitcoin goes down, the next day the Jones goes down. That’s the pattern you get. That shows that is a leading indicator.”

Only when institutional and retail investors truly “throw in the towel” and stop putting more money into the market because of losses is when sentiment has hit rock bottom, he said. “That’s the time to start buying stocks.”  

Worries about global recessionary risks have wiped out billions in Bitcoin’s market value, with the token crashing about 70% from its peak to trade near $20,000. That tumble has coincided with a plunge into a bear market by a closely watched MSCI world equity index, with investors fretting over the impact of rising interest rates in most countries as well as supply-chain disruptions in China and Europe.

As long as Bitcoin investors “are still talking about buying on dips that means there is a feeling of hope,” he said. “That also means that we have not reached the bottom of a bear market.” 

The veteran emerging-markets investor said he prefers to hold “some cash” at the moment, and may deploy it into Indian stocks in the building-materials, software and medical-testing sectors.

©2022 Bloomberg L.P.

 

Crypto Crash Survivors Could Become Tomorrow’s Amazons, BOE Says

Crypto Crash Survivors Could Become Tomorrow’s Amazons, BOE Says

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Crypto Crash Survivors Could Become Tomorrow’s Amazons, BOE Says
© Bloomberg. An attendee near logos of different cryptocurrencies at the CryptoCompare Digital Asset Summit at Old Billingsgate in London, U.K., on Wednesday, March 30, 2022. Bitcoin and other cryptocurrencies had been, up until the last few weeks, mired in a similar downtrend as other riskier assets, like U.S. stocks. Photographer: Luke MacGregor/Bloomberg

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(Bloomberg) — The survivors of the rout in cryptoassets could become the technology companies of the future rivaling Amazon.com Inc (NASDAQ:) and eBay Inc (NASDAQ:)., Bank of England Deputy Governor Jon Cunliffe said.

Cunliffe compared the crash that has wiped more than $1 trillion off the value of and other crypto currencies this year to the dotcom collapse at the start of the millennium.

“The analogy for me is the dotcom boom, when $5 trillion was wiped off values,” Cunliffe said at the Point Zero Forum in Zurich on Wednesday. “A lot of companies went, but the technology didn’t go away. It came back 10 years later, and those that survived — the Amazons and the eBays — turned out to be the dominant players.”

He stressed that crypto technology has “huge applications and potential within the financial sector” even though the market is wobbling at the moment. 

“Whatever happens over the next few months to crypto assets, I expect crypto technology and finance to continue.” Cunliffe said. “It has the possibility of huge efficiencies and changes in market structure.”

The BOE is developing plans for its own retail central bank digital currency and will deliver a consultation paper at the end of the year.

One key issue under investigation is whether to produce a fully independent CBDC with an “on or off ramp to fiat” money or just “something that is flexible enough” to be used in private stablecoins.

Cunliffe gave an example of stablecoins that are integrated into supply chain and logistics systems to maximize efficiency. “We couldn’t provide something that does all those things,” he said.

“The question is, are you better off having private stablecoins to be more optimized in certain areas, which then link back to a central bank ledger in some way? Or should we provide the base?” Cunliffe said.

The big philosophical question regulators face is whether to allow “fully disintegrated settlement,” which would mean regulating the AI code behind the crypto technology. 

“I have the same confidence in that as a fully automated pilotless plane from London to Zurich, or a fully driverless car,” he said. “I want to know where the liability is — if the algo goes wrong and I crash.”

“My sense is that will be very difficult for the regulatory system to cross in the near future.”

©2022 Bloomberg L.P.