Cryptographic Crash: Forced Sale Cools Down; correlation with actions back to focus

Hi! Welcome back to Distributed Ledger, our weekly crypto newsletter that arrives in your inbox every Thursday. I will walk you through what is happening in the current bear market.

As usual, find me on Twitter at @FrancesYue_ to send feedback or tell us what you think we should cover. You can also contact me via email to share your personal stories with encryption.

Encryption at a glance

Bitcoin BTCUSD,
+0.92%
it has lost 5.8% over the past seven days, trading at around $20,374 on Thursday, according to CoinDesk data. Ether ETHUSD,
+0.79%
lost about 5.8% in the seven-day period to about $1,095. Dogecoin DOGEUSD meme token,
+0.49%
gained 7.9% while another dog-themed token, Shiba Inu SHIBUSD,
1.38,
rose about 23.3% compared to seven days ago.

encryption metrics
Biggest Winners

Price

%7 day return

Titan Swap

$4.74

65.2%

Synthetix Network

$3.12

59.6%

Celsius network

$0.96

58.1%

evmos

$2.09

30.5%

uniswap

$5.52

26.1%

Source: CoinGecko on June 23

Biggest Losers

Price

%7 day return

DeFiChain

$1

-16.7%

KuCoinGenericName

$10.41

-11.6%

Gala

$0.06

-11.3%

cardano

$0.47

-10.9%

cETH

$22.27

-9.1%

Source: CoinGecko on June 23

Cool down

Last weekend, a strong sell-off saw bitcoin as low as $17,601 before rebounding to around $20,382 on Thursday. The drop was largely driven by the forced sale, according to Thomas Dunleavy, a senior research analyst at Messari.

The cryptocurrency market was in chaos after Celsius, one of the biggest crypto lenders, halted withdrawals since June 12, while Three Arrows, one of the most active hedge funds in the industry, reportedly failed to meet margin calls. from various creditors, according to the Financial Tempos. Investors were worried about contagion risks – I wrote more about that here.

During recent sell-offs, bitcoin and ether have underperformed some smaller coins, which is “very unusual,” according to Dunleavy. Bitcoin and ether typically tend to outperform smaller coins during market downturns as investors shift into “flight to safety” mode.

The latest trend is “an indication that people are just selling what they had to meet any kind of margin requirement,” according to Dunleavy.

Since then, the market has calmed down a bit, while “liquidity in terms of actual volumes that increase during liquidation has also declined,” Dunleavy said. “I think the broader question now is, how has the cryptocurrency market contagion slowed down, if we take the correlation with the stock market.”

“If the macro goes down, will Bitcoin see another leg down? Or are we going to hold the water here?” said Dunleavy.

SBF rescue?

Crypto billionaire Sam Bankman-Fried is pumping funds into two cryptocurrency companies that have been under the spotlight after Celsius and Three Arrows showed signs of trouble.

Celsius rival BlockFi announced on Tuesday that it has received a $250 million revolving line of credit from cryptocurrency exchange FTX to help bolster its balance sheet. BlockFi announced last week that it would lay off 20% of its employees as the rapidly changing macroeconomic environment weighs on the company’s growth rate.

Meanwhile, cryptocurrency exchange Voyager Digital Ltd said its subsidiary Voyager Digital Holdings has entered into a definitive agreement to raise $200 million in cash and a USDC revolver and a 15,000 BTC revolver from Alameda Ventures, the venture capital arm. from Bankman-Fried’s quantitative cryptocurrency trading company, Alameda. search.

Voyager Digital Ltd. also revealed its subsidiary Voyager Digital LLC’s exposure to Three Arrows, including 15,250 bitcoins, or about $310 million based on the cryptocurrency’s recent price, and $350 million of USDC stablecoin. Voyager may issue a default notice to Three Arrows for defaulting on its loan, the company said.

short bitcoin ETF

ProShares on Tuesday launched its Short Bitcoin Strategy ETF, or BITI BITI,
-3.87%,
the first bitcoin-connected inverse exchange-traded fund in the US It arrived at a time when bitcoin is down about 70% from its all-time high.

BITI tracks the inverse of the daily performance of the S&P CME bitcoin futures index, according to the fund’s datasheet.

“BITI allows investors to conveniently obtain short exposure to bitcoin by purchasing an ETF in a traditional brokerage account,” ProShares Chief Executive Michael L. Sapir wrote in a statement on Monday.

Still, like other inverse ETFs, BITI is designed to track the opposite of the underlying index in a single day. Investors who hold the fund for more than a day may get worse returns than they expected, especially when volatility is high in the market.

Crypto companies, funds

shares of Coinbase Global Inc.. COIN,
+13.43%
jumped 9.6% to $56.83 on Thursday and rose 11% in the past five sessions. by Michael Saylor MicroStrategy Inc.
MSTR,
+10.18%
It gained 4.9% on Thursday to $179.20 and is up 11% over the past five days.

mining company Riot Blockchain Inc.
REBELLION,
+7.39%
Shares are up 2.9% to $4.74 on Thursday and are up 4.6% over the past five days. shares of Marathon Digital Holdings Inc.
MARA,
+4.44%
it fell 0.1% to $6.74, with a 2.8% gain over the past five days. another miner, Ebang International Holdings Inc. EBOON,
-3.15%,
fell 5.5% to $0.46 on Thursday, contributing to a 15.6% loss over the past five days.

Overstock.com Inc.
OSTK,
+6.50%in
the shares traded up 5.1% to $31.19. Shares gained 11.4% over the five-session period.

shares of Block Inc.
SQ,
+10.92%,
formerly known as Square, rose 8.6% to $65.89, contributing to a 14.6% gain for the week. Tesla Inc. TSLA,
-0.43%
shares fell 1.7% to $696.48, while up 8.9% over the past five sessions.

PayPal Holdings Inc.
PYPL,
+1.15%
fell 0.3% to $72.78 and rose 2.2% over the five-session period. Nvidia Corp.
NVDA,
-0.83%
the stock fell 1.9% to $160.46, looking for a 2.8% gain over the past five trading days.

Advanced Micro Devices Inc.
OMG,
-1.58%
shares fell 2.7% to $81.46 on Thursday and were down 0.7% from five trading sessions ago.

Among cryptocurrency funds, ProShares Bitcoin Strategy ETF
BITO,
+3.85%
It rose 1.3% to $12.63 on Thursday, while its Short Bitcoin Strategy ETF lost 1.4% to $40.73. Valkyrie Bitcoin Strategy ETF
BTF,
+3.87%
rose 1.3% to $7.85, while VanEck Bitcoin Strategy ETF
XBTF,
+3.77%
gained 0.7% to $19.75.

Bitcoin trust in shades of gray
GBTC,
+5.63%
up 1.2% to $13.12.

Required readings

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