September 25, 2022

Results of the week: Bitcoin failed the level of $18,000, and Celsius and 3AC were on the verge of bankruptcy

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Bitcoin and Ethereum crashed below $18,000 and$1000 respectively, Celsius Network and Three Arrows Capital were on the verge of insolvency, USDD lost parity against the US dollar and other events of the outgoing week.

The price of Bitcoin failed the level of $18,000, Ethereum — $1000

The first cryptocurrency opened the week with a fall. On June 13, its price fell below $23,000, and on Saturday broke through the $20,000 level, testing the range under $18,000.

Ethereum quotes have also been declining throughout the week. On June 18, the price of the asset at the moment dropped to $881 (on the Binance exchange).

At the time of writing, Bitcoin is trading near $19,600, while Ethereum is trading near $1,060.

The flagships pulled the rest of the market with them - its capitalization fell below $1 trillion. All major digital assets were in the red zone at the end of the week.

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Data: CoinGecko.

The fear and greed index collapsed to panic at around 8 points, comparable to the values ​​of March 2020 and Black Thursday.

The week on the US stock exchanges opened with a significant drop in the shares of companies focused on the cryptocurrency industry: MicroStrategy, Coinbase, Silvergate Capital and others.

Due to the collapse of bitcoin "paper" lossMicroStrategy topped $1 billion and El Salvador had $56 million. However, Michael Saylor said the analytics software provider anticipated market volatility when choosing a digital gold investment strategy. He assured that the company is ready to keep the cryptocurrency further.

Leading OTC platform Cumberland stated thatnow “the biggest flows of the year” are passing through the OTC table, however, she did not rule out a further decline in the market due to the possible collapse of another leading stablecoin.

According to Glassnode, fundamentalindicators have worsened, and now even long-term holders of cryptocurrencies are suffering significant losses. Investors' net realized loss was a record $4.2 billion.

Coin Metrics noted that during the collapse, miners sent a record 88,000 BTC to cryptocurrency exchanges.

The market fall affected the operation of the landing platform Celsius

On June 13, crypto lending platform Celsius suspended withdrawals, exchanges, and transfers between accounts “due to extreme market conditions.” The project token reacted with a 50% drop.

According to experts, the Celsius solution could have beencaused by losses when using high-risk DeFi instruments, in particular collateralized synthetic assets like stETH from Lido and Wrapped Bitcoin. Another large part of the platform's funds is locked on the Ethereum 2.0 deposit contract and is illiquid until the transition to the Proof-of-Stake (PoS) algorithm.

Competing platform Nexo announced its readinessbuy out the Celsius loan portfolio. On June 15, the CEL token rose by more than 50% against the backdrop of data that the company was strengthening its debt positions.

The network also reported that Celsius has hiredCitigroup to look for possible financing options, while leading investors have not expressed a desire to save the company. Regulators in five states are believed to have opened an investigation into the incident.

The largest hedge fund got it too Three Arrows Capital

Singapore hedge fund Three Arrows Capital (3AC)- a major investor in the industry's leading projects - also began to liquidate assets to cover liabilities. In particular, the fund started converting stETH against the background of the collapse of Ethereum to $1,000, the price of liquidating a position in the Aave protocol.

3AC co-founder Su Zhu controversialcommented on the situation, and the network began to speculate about the insolvency of the company. At the same time, the head of 8 Blocks Capital, Danny Yuan, said that 3AC used $ 1 million of his company's funds in serviced accounts to cover margin calls.

The fund is also known to have led a $1 billion Terra funding round in the past and was one of the largest holders of Grayscale units at the end of 2021, which could indicate significant losses.

The landing page announced the liquidation of 3AC positionsBlockFi platform. Later it became known that the list of platforms was replenished with BitMEX, FTX, Deribit and Bitfinex. Due to the scale of the hedge fund's activities, the uncertainty in its work has affected other projects, such as the Finblox staking platform. Some players who have been funded by 3AC have stated that it does not manage their assets.

Tether noted that although the crypto-lendingthe Celsius platform is part of its investment portfolio, the negative events did not affect the financial stability of the USDT stablecoin issuer. Rumors about a loan to the Three Arrows Capital fund were called untrue by the company. Simultaneously, Tether dismissed speculation about the dominance of Chinese commercial paper reserves.

At the end of the week, 3AC co-founder Kyle Davissaid that the fund is exploring the possibility of selling assets and "financial assistance" from other companies, and is also trying to negotiate with creditors to defer payments.

At the end of the week, one of the largest cryptocurrencylenders and asset managers in the Asian region - Babel Finance - also announced a lack of liquidity due to market volatility and the suspension of payments and withdrawals from its own products.

What's up with Lido's stETH?

As a result of liquidations of positions in stETH by largeby crypto investors like Alameda, Three Arrows Capital and Celsius, the synthetic asset has lost its link to Ethereum. By Friday, only 0.935 ETH was offered for 1 stETH.

Since May, the total value of assets in the poolETH/stETH liquidity of the Curve protocol has decreased from $4.5 billion to about $620 million. The pool’s imbalance also puts pressure on the price: ~111,300 ETH accounts for ~491,000 stETH.

The USDD stablecoin briefly lost its peg to the US dollar. Tron DAO made a number of unsuccessful attempts to stabilize the exchange rate

June 13 Tron algorithmic stablecoin USDDbriefly lost parity against the US dollar and dropped to $0.97. The DAO behind the reserves of the Tron asset sent 700 million USDC to protect the peg, but this did not help - on June 15, the rate fell to $0.95.

Experts were concerned about the activity of the DAO — the conversion of reserves into volatile assets amid a falling market and a decrease in the annual interest rate on stablecoin deposits from 30% to 10.9%.

Significantly dipped and the rate of "stable coin"USDN from Waves (dipped to $0.76 on June 15). After that, the South Korean exchange Upbit issued a warning to users about the risks associated with algostablecoins.

As the Tron market plunged, the DAO said it would withdraw 2.5 billion TRX from the Binance platform “to protect the blockchain industry and the cryptocurrency market.” Later, the organization announced the withdrawal of another 3 billion coins.

What to discuss with friends?

  • Binance will limit deposits and withdrawals of Litecoin using the MimbleWimble privacy feature.
  • The founder of BlockTower Capital assessed the survival of bitcoin on the example of dot-coms in 2000.
  • Ukraine launched a token backed by bonds.
  • Elon Musk, SpaceX and Tesla have been sued for $258 billion for promoting Dogecoin.

Mass layoffs amid crypto winter

The beginning trend of mass layoffs is gaining momentum. This week, Crypto.com CEO Chris Marszalek announced the optimization. According to him, 260 employees or 5% of the staff will leave the company.

Due to deteriorating market conditions, Coinbase will cutstaff by about 18%, said CEO Brian Armstrong. Crypto lending platform BlockFi announced a staff cut of more than 850 employees by about 20%.

Against the backdrop of a general negative trend, theleading exchange Binance. Its head, Changpeng Zhao, on the contrary, announced the opening of 2,000 new vacancies, noting that winter is a good opportunity to prepare for the next bulrun.

This week, the CEO of the Kraken cryptocurrency exchange, Jess Powell, presented a document on the corporate culture of the company and invited all employees who disagree with its content to quit.

Circle introduces euro-pegged stablecoin Euro Coin

Euro-pegged stablecoin Euro Coin(EUROC) is backed by euro-denominated reserves held by financial institutions "within the US regulatory perimeter". One such organization will be Silvergate Bank.

At the start, Euro Coin was launched on the Ethereum blockchain as an ERC-20 standard token. Circle will add support for additional networks in the future. The start of trading is scheduled for June 30.

Also on ForkLog:

  • The community has warned of possible liquidations of whale positions in ETH and SOL.
  • The head of Nexo compared the crisis in the crypto market to the banking panic of 1907.
  • Mark Cuban predicted the disappearance of crypto projects without "real prospects"
  • The expert described a potential scenario for destabilizing the DAI rate

What else to read and see?

Before the long-awaited update of the Ethereum network - TheMerge - only a few months left. ForkLog figured out the features of the upcoming upgrade and its potential impact on the investment attractiveness of the second largest cryptocurrency by capitalization.

Did you explain how Celsius, 3AC and stETH are connected, and also talked about the impact on the market of their potential bankruptcy and the possible collapse of “staking ether”?

ForkLog's educational cards covered what Lido, liquid staking and Web3 are. Found out what happened to the Celsius platform.

Traditional digests collected the main events of the week in the fields of cybersecurity and artificial intelligence.

Blockchain technology remains one of the mosthot trends among financial, government and commercial organizations around the world. ForkLog offers an overview of the most exciting recent initiatives.

On June 13, live ForkLog LIVE discussed market movements and much more with our guests:

  • Anton Kravchenko - founder and CEO of Xena Exchange;
  • Ton Weiss - bitcoin evangelist, trader;
  • Mikhail Chobanyan, founder of the KUNA.io exchange.

This week we also released a special report on how women will change the world of blockchain and cryptocurrencies.


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