“Better Days Ahead With Crypto Deleveraging Coming To An End” — Joker

Crypto Billionaire Sam Bankman-Fried Doles Out Credit Lines to Stem Contagion (Updated: 6-21-2022). “Better Days Ahead With Crypto Deleveraging Coming To An End” — Joker

Updated: 7-1-2022

“Better Days Ahead With Crypto Deleveraging Coming To An End” — Joker

A strategist at JPMorgan predicts that the worst of the bear market could be over as stronger crypto firms have come in to bail out the industry in the midst of major deleveraging.

The historic deleveraging of the cryptocurrency market could be coming to an end, which could signal the close of the worst of the bear market, according to a JPMorgan analyst.

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In a Wednesday note, JPMorgan strategist Nikolaos Panigirtzoglou highlighted the increased willingness of firms to bail out companies and a healthy pace of venture capital funding in May and June as the basis for his optimism. He said key indicators support the assessment:

“Indicators like our Net Leverage metric suggest that deleveraging is already well advanced.”

The deleveraging of major crypto firms, where their assets have been sold either willingly, in a rush or via liquidation, began largely in May when the Terra ecosystem collapsed and wiped out tens of billions of dollars.

Since then, crypto lenders BlockFi and Celsius and investment firm Three Arrows Capital have run into their own problems.

Panigirtzoglou added that the severity of deleveraging of some crypto firms could be so severe that they “suggest that the tremors from this year’s crypto market fall continue to reverberate.”

However, Panigirtzoglou argues that deleveraging may be coming to an end, with crypto entities stepping into to bail out struggling companies, stating:

“The fact that crypto entities with the stronger balance sheets are currently stepping in to help contain contagion.”

Amid the calamities befalling several blockchain firms such as Three Arrows Capital and Celsius, Sam Bankman-Fried’s FTX exchange is reportedly positioning itself to expand its influence across the industry.

Rumors are swirling that FTX is offering to buy the BlockFi crypto lending platform for $25 million, according to a June 30 report from Cointelegraph.

However, BlockFi CEO Zac Prince has denied the rumors in a Thursday tweet.

Panigirtzoglou also sees the healthy pace of venture capital funding in the crypto space as a good sign. According to JPMorgan’s estimates, there was about $5 billion in VC funding to crypto firms in May and June.

Fundraising metrics tracker Dove Metrics, using Airtable’s data, estimates crypto funding is higher, at $8.6 billion in the same period.

This rate of funding is down $2.2 billion from March and April, but up $3.4 billion from May and June 2021.

The latest predictions from JPMorgan should blow fresh air into the hearts of crypto investors in 2022 who have endured what Glassnode has deemed the worst bear market in the history of crypto trading.

Since November 2021, when the total crypto market cap topped $3 trillion, it has fallen below $1 trillion to $934 billion, according to CoinGecko.

Updated: 6-21-2022

Crypto Billionaire Sam Bankman-Fried Doles Out Credit Lines to Stem Contagion

* His Firms Are Supplying Credit To BlockFi, Voyager Digital
* He ‘Is The New John Pierpont Morgan,’ Anthony Scaramucci Says

Sam Bankman-Fried, the crypto billionaire who co-founded digital-asset exchange FTX Trading Ltd., is providing credit lines to try to stem contagions for his beleaguered industry.

Crypto lending platform BlockFi Inc., which had been raising funds at a reduced valuation, said on Tuesday that it secured a $250 million revolving line of credit from FTX.

Last week, crypto exchange Voyager Digital Ltd., whose shares are down 90% this year on Toronto Stock Exchange, got a $200 million credit line — a mix of cash and USDC stablecoins — as well as a separate, 15,000-Bitcoin revolving facility from Alameda Research, Bankman-Fried’s trading firm.

A wave of liquidation has triggered fear of contagion risks in the crypto industry, after a broad-based selloff in digital assets and the spectacular collapse of the TerraUSD and Luna tokens.

Major lenders Celsius Network Ltd. and Babel Finance have frozen withdrawals, while crypto hedge fund Three Arrows Capital Ltd. is facing liquidity troubles.

“Sam Bankman-Fried is the new John Pierpont Morgan — he is bailing out cryptocurrency markets the way the original J.P. Morgan did after the crisis of 1907,” Anthony Scaramucci, founder of SkyBridge Capital, said in an interview, referring to that year’s banking panic, which led to the creation of the Federal Reserve System.

Scaramucci said he’d invested alongside Bankman-Fried in several crypto ventures.

An FTX spokesperson, asked for comment about the credit lines, referred to a Twitter thread Tuesday from Bankman-Fried.

“We take our duty seriously to protect the digital asset ecosystem and its customers,” he wrote on Twitter.

In a recent interview with NPR, Bankman-Fried, 30, said he has a responsibility to consider stepping in, “even if it is at a loss to ourselves,” to stem contagions and help the industry thrive.

1) Today we’re injecting $250m into BlockFi and partnering with them so they can navigate the market from a position of strength.https://t.co/nocsdi0GLF

— SBF (@SBF_FTX) June 21, 2022

“This past weekend was critical in terms of finding white knights who could help develop a bid to stabilize this market,” Jeff Dorman, chief investment officer at asset-management firm Arca, wrote in a note Tuesday.

“It doesn’t take a lot of capital right now to support prices and failing lenders, and there are a lot of players incentivized to ensure this industry doesn’t fail.”

Major crypto players have a history of bailing out key troubled firms. Last year, FTX provided $120 million debt financing for Liquid Group Inc. after hackers stole from the Japanese crypto exchange. FTX later acquired Liquid.

In April, Binance led a $150 million round for the creator of popular game Axie Infinity to help restore user funds affected by a hack.

The latest financing provided by Bankman-Fried is “not unlike private equity shops that will invest more capital into portfolio companies amid distress — sometimes it’s enough, sometimes not,” said Noel Hebert, director of credit research at Bloomberg Intelligence. “Intra-crypto industry players are among the only ones with an incentive to lend here.”

Tom Dunleavy, senior research analyst at crypto-data firm Messari, said some would compare the move to Warren Buffett providing support to Goldman Sachs Group Inc. in 2008.

It’s “a respected industry player supporting a systemically important firm with capital at a time where they think the bottom could be in, or close,” Dunleavy said.

While recent liquidations have stemmed from the collapse of TerraUSD, he added, “the further we get from the Terra incident, the more things start to calm down, the less potentially broader liquidity issues we will see.”

Updated: 6-22-2022

SEC’s Hester Peirce Opposes Crypto Bailouts — SBF Didn’t Get The Memo

The commissioner made it clear she does not support bailouts for anyone in the crypto industry, arguing it’s better to “let these things play out.”

United States Securities and Exchange Commission (SEC) commissioner Hester Peirce has spoken out against crypto company bailouts, arguing it’s actually better to “let these things play out,” to create a more sustainable industry.

Peirce, the most pro-crypto commissioner for the U.S. SEC, told Forbes that the recent crash in crypto, though painful, is separating strong companies from the weak:

“When things are a bit harder in the market, you discover who’s actually building something that might last for the long, longer term and what is going to pass away.”

The commissioner made it clear that she did not support bailouts for anyone in the crypto industry, particularly those that mismanaged risk and became over-leveraged.

“Crypto does not have a bailout mechanism […] I don’t want to come in and say that we’re going to try to figure out a way to bail you out if we don’t have the authority to do it. But even if we did, I would, I would not want to use that authority, we really need to let these things play out.”

The SEC commissioner’s comments come amid a slew of insolvencies, lay-offs and hiring freezes within the crypto market.
Crypto whales to the rescue

FTX and Alameda Research founder Sam Bankman-Fried is taking a different approach and has been stepping in to rescue crypto companies struggling due to the market crash.

On Tuesday, Bankman-Fried informed his 706,900 Twitter followers that he and FTX will be injecting $250 million into BlockFi through a revolving credit facility to bolster its balance sheets and strengthen the platform.

6) We take our duty seriously to protect the digital asset ecosystem and its customers.

— SBF (@SBF_FTX) June 21, 2022

It came only days after Alameda Research agreed to give Voyager Digital a 200 million USD Coin (USDC) loan and a “revolving line of credit” of 15,000 Bitcoin (BTC), worth $446.3 million at the time of writing, to be used “if needed to safeguard customer assets.”

Bankman-Fried told NPR on Sunday that this is something he and his companies have done “a number of times in the past” to “stem contagion” amid a cascade of falling crypto companies.

In an interview with Bloomberg on Wednesday, Anthony Scaramucci, founder of SkyBridge Capital, called the FTX CEO the “new John Pierpont Morgan,” in reference to the Wall Street financial baron who pledged his own money and convinced others to do the same to shore up the banking system during the 1907 Bankers’ Panic:

“He is bailing out cryptocurrency markets the way the original J.P. Morgan did after the crisis of 1907.”

Peirce argues, however, that the downturn can be a valuable learning opportunity for market participants and regulators to see how the market moves in times of stress.

“It is helpful for us to see the points of connection. It’s a moment, not only for market participants to learn, but it’s also for regulators to learn so that we can have a better sense of how the market operates.”

The market turmoil has already badly affected lending platform Celsius Network and crypto-focused hedge fund Three Arrows Capital (3AC), which is facing insolvency after incurring roughly hundreds of millions in liquidations tied to the ongoing collapse of Ether’s (ETH) price.

Updated: 6-24-2022

‘Bad’ Crypto Projects Should Not Be Bailed Out Says Binance Founder CZ

Binance CEO Changpeng Zao has argued that crypto firms that have been poorly managed, poorly operated, or have released poorly designed products should be left to crumble.

Binance founder and CEO Changpeng “CZ” Zhao argues that “bad” crypto projects should be left to fail and not receive bailouts from crypto firms with healthy cash reserves.

In a Thursday blog post, CZ said that firms that have been poorly operated, poorly managed or have released poorly designed products shouldn’t receive bailouts — and should instead be left to crumble:

“In short, they are just ‘bad’ projects. These should not be saved. Sadly, some of these ‘bad’ projects have a large number of users, often acquired through inflated incentives, creative marketing, or pure Ponzi schemes.”

“Further, in any industry, there are always more failed projects than successful ones. Hopefully, the failures are small, and the successes are large. But you get the idea. Bailouts here don’t make sense,” he added.

The comments come amid recent moves by crypto billionaire Sam Bankman Fried and his firm Alameda Research to bail out companies and projects with recent liquidity troubles, such as Voyager Digital with a revolving loan of 350 million USD Coin (USDC) and 15,250 Bitcoin (BTC), which is worth $464.48 million at time of writing.

CZ went on to note, however, that Binance could look to support some cash-light firms that either have “problems but are fixable” or are “barely surviving but have great potential.”

“Many projects have come to us who want to engage and talk. Again, in real life, these categories are not clear labels. All projects view themselves as the third category, and we need to look at each project in detail to decide. There is some subjectiveness to it,” he said.

A number of firms are undergoing liquidity issues as a result of the current bear market, while others are reeling from exposure to potentially insolvent firms and projects such as Three Arrows Capital and Celsius.

The comments from the Binance CEO echo similar sentiments from the United States Securities and Exchange Commission (SEC) commissioner Hester Peirce on Tuesday, who argued against crypto bailouts altogether.

In an interview with Forbes on Tuesday, the crypto-friendly commissioner known as “Crypto Mom” argued that instead of bailing out struggling firms, its better to “let these things play out” to create a more sustainable industry.

“When things are a bit harder in the market, you discover who’s actually building something that might last for the long, longer term and what is going to pass away,” she said.

Centralized Binance

On Ju CZ stated during an interview with Bloomberg Business week the mission of his company is to support autonomous blockchain-based projects that can operate without a central authority or leader, as opposed to the traditional centralized model.

The CEO also referred to his own company as an “organization” and his employees as “team members,” as part of this mission of decentralization.

However, the publication cited comments from supposed anonymous former Binance employees saying that the company may not be as decentralized as claimed, stating that CZ has the sole authority over the company and its business decisions.

“At the end of the day, he’s the holding company,” a former employee told the publication.

The angle of the Bloomberg article may require a pinch of salt, given that CZ has never explicitly stated that Binance was a decentralized company despite his advocacy for the concept.

However, the Binance Smart Chain does claim to be a decentralized eco-system but has drawn valid critiques over a lack of such in the past.

While CZ has taken aim at poorly managed companies this week, the management structure of Binance has also been brought into question.

Updated: 6-25-2022

Morgan Creek Is Trying To Counter FTX’s BlockFi Bailout, Leaked Call Shows

FTX’s $250 million credit facility offer – if inked as initially proposed – stood to effectively wipe out all BlockFi shareholders, including Morgan Creek Digital, the firm told its investors.

Cryptocurrency investment firm Morgan Creek Digital is attempting to raise $250 million from investors to purchase a majority stake in crypto lender BlockFi, a leaked investor call from Tuesday reveals.

Morgan Creek’s plan to rapidly assemble an equity offer was hatched in response to crypto exchange FTX’s Tuesday morning announcement that it would extend a $250 million credit line to BlockFi.

Morgan Creek Digital declined to comment. A person with knowledge of the effort said there are multiple venture capital funds that are exploring ways to provide equity financing to BlockFi as the lender struggles to stay afloat.

At stake is the ability of BlockFi’s existing shareholders, including longtime backer Morgan Creek, to recoup their investments.

“I’ve been making calls all day,” Morgan Creek Digital managing partner Mark Yusko said on the leaked call.

According to Yusko, the FTX credit line proposal had a catch for BlockFi’s existing shareholders: It gave FTX the option to buy BlockFi “at essentially zero price.”

If FTX were to exercise said option, it would effectively wipe out all of BlockFi’s existing equity shareholders, including management and employees with stock options, as well as all equity investors in the company’s previous venture rounds.

However, Yusko said on the leaked call that BlockFi founders Zac Prince and Flori Marquez had a valid reason for preliminarily accepting the terms:

Of the several emergency financing offers BlockFi received, FTX’s was the only one that would not subordinate client assets to the rescuer.

In other words, unless BlockFi went with FTX, its depositors would have had to wait in line behind the new lender to be repaid.

Additionally, BlockFi had not received any equity financing options at that stage. (Yusko did not identify any of the other firms that proposed bailout packages for BlockFi.)

BlockFi CEO Prince tweeted on June 21 that the company had signed a preliminary term sheet with FTX. Yusko told investors on the leaked call that day that FTX and BlockFi were “probably three days away from signing a definitive agreement.”

“We are still negotiating the terms of the deal and cannot share more information at this time,” a BlockFi spokesperson told CoinDesk on Saturday.

“We anticipate sharing more on the terms of the deal with the public at a later date.” FTX did not respond to requests for comment by press time.

According to Yusko on the leaked call, in the event that FTX exercised its option after extending the credit line, only investors in the most senior tranche of the company’s latest raise would get back anything, and even that would amount to pennies on the dollar.

Morgan Creek, which participated in several funding rounds for BlockFi, would be among those holding the bag.

“The only alternative is to raise an equivalent amount in equity and that’s what we’re working on,” Yusko told investors on the call. “I would say it’s a 10% possibility but not zero.”

A recording of the call, which CoinDesk reviewed, offers a rare window into the closed-door negotiations to rescue BlockFi, one of the crypto industry’s largest lenders, amid a meltdown in the digital asset and broader financial markets.

It also shows how the current turbulence echoes past financial crises, with Yusko comparing FTX’s rescue package to J. Pierpont Morgan’s bailout of the Knickerbocker Trust in 1907.

Indeed, Wall Street firm Goldman Sachs has been trying to organize an investor group to scoop up assets of another troubled crypto lender, Celsius Network, at steep discounts in the event that company files for bankruptcy.

On Friday, the Wall Street Journal reported that FTX was in talks to acquire an equity stake in BlockFi. It is unclear whether new developments since Tuesday have substantially changed negotiations.

When asked by an investor on the call, Yusko said Morgan Creek would be open to an “in-between deal” where FTX (led by billionaire Sam Bankman-Fried) and Morgan Creek both put up a portion of the capital.

“I will definitely try to pursue [a joint deal],” said Yusko. “Not that I have SBF on speed-dial, but I could probably get that call.”

Yusko said that he spoke with one potential lead investor that could write a $100 million check, as well as two other investors who “expressed interest” and could write checks up to $50 million.

Morgan Creek Digital, co-founded by Anthony “Pomp” Pompliano, is one of BlockFi’s largest investors.

The firm has participated in BlockFi’s Series A through D fundraising rounds across three funds and a special purpose vehicle (SPV), a type of investment structure that allows an investor to invest in a single company.

Yusko cautioned that while Morgan Creek was doing all it could to salvage its investment in BlockFi, success was far from assured.

“It’s not over, but it is definitely looking dark,” he said.

Updated: 6-26-2022

‘I Missed The Bus On Bitcoin, But Now Feel Like My Time Has Come

I Have Another 25 Years Of A Boring 9-To-5 Job.’ Is The Crypto Crash An Opportunity To Buy Low?

‘I sit here day after day, doing the same old drudgery, and I want to have some hope that I may have an exit strategy’.

Dear Quentin,

I read a letter from a reader last year who was suffering from crypto FOMO, and I have been following the crypto markets ever since. I felt like I missed the bus on Bitcoin, but now feel like my time has come. Is it time to go big or go home?

I have another 25 years of a boring 9-to-5 job, and I just want out. The markets are tanking, and there’s talk of recession. I sit here day after day, doing the same old drudgery, and I want to have some hope that I may have an exit strategy.

Should I buy Bitcoin BTCUSD, 0.28% and Ethereum ETHE, +2.27% ETHUSD, -1.35%, and keep it as an early escape or even a retirement strategy? My 401(k) is a shadow of what it was last year.

Can you please help?

Always on the Sidelines

Dear Sidelines,

I remember that letter vividly. He wrote: “I’m too old to sit and hope I can make up for the lost time by safely investing my little bit of money, and getting 5% returns on it for the next 15 years.” And I replied: “Dabble in crypto if you like, but again at your own peril. The same is true of the stock market. There are no guaranteed get-rich-quick schemes.”

Nothing has changed. Many risks remain. I understand your frustrations. You feel trapped, and cryptocurrencies seem (or seemed) like a good get-rich-quick or get-rich-in-the-not-too-far-off-future plan.

Neither of those prospects is likely, as you would have to risk a lot of money to fulfill that dream and would still end up losing your shirt, like many investors in crypto have.

Of course, the key with any investment is to buy low and sell high. Crypto investor Josh Rager has done his own analysis on the recent highs and lows of Bitcoin, and sees lows of $17,000, $14,000 and at $11,000.

He stresses that these are his own opinions based on previous bounces. “The equities market is going to have a big impact overall on what Bitcoin will do,” he cautions.

“It’s going to be years from now, hopefully in the next decade, where we see Bitcoin break away from the equities market,” he said. Buying the bottom is easier said than done, especially with a volatile asset like Bitcoin.

But he, like The Moneyist, is not giving financial advice, or telling you to buy at any level. When it comes to crypto, like any investment, it’s every man and every woman for himself and herself.

‘Given the volatility in crypto markets amid uncertainty over inflation and the prospect of recession, you may benefit from your 401(k) long before you do any cryptocurrency investment.’

There are, of course, people who have ridden out the peaks and valleys and still believe that there’s value in Bitcoin in the long run, such as this investor who believes Bitcoin has long-term prospects of reaching $250,000 and above, given that there will come a time when there will be no more mining of the coin after the 21 million cap is reached.

Some estimate that year will be 2140.

About that 21 million Bitcoin limit: “This is determined by bitcoin’s source code which was programmed by its creator(s), Satoshi Nakamoto, and cannot be changed. Once all bitcoin is mined, the amount of coins in circulation will remain fixed at that level permanently,” according to a report by Coinbase COIN, +4.30%.

“The rate at which new Bitcoin are mined is geared to slow down over time,” the report says. “The reward for mining each block of bitcoin — which is done every 10 minutes — halves every 210,000 blocks.

That’s roughly once every four years. As of 2022, the reward per block had diminished from its initial reward of 50 BTC per block in 2009 to just 6.25 bitcoin.”

Given the volatility in crypto markets amid uncertainty over inflation and the prospect of recession, you may benefit from your 401(k) long before you do any cryptocurrency investment.

In fact, the crypto lending platform Celsius Networks LLC said Sunday that it was pausing all withdrawals, swaps and transfers between accounts “due to extreme market conditions.”

Some economists, like Peter Schiff, are big-time skeptics. He tweeted that with Bitcoin dropping below key support at $25,000 and Ethereum below $1,300, the combined market cap of nearly 20,000 cryptos have broken below $1 trillion, from a record-high of $3 trillion. “That’s $2 trillion down, $1 trillion left to go,” he wrote. “The last trillion will be the most painful.”

Charles Schwab, meanwhile, calls Bitcoin and other cryptocurrencies speculative investments. “We don’t believe that Bitcoin fits within traditional asset allocation models at this time, as it is neither a traditional commodity, such as gold, nor a traditional currency,” the Schwab Center for Financial Research says in a blog post.

“Bitcoin’s dramatic volatility is driven primarily by supply and demand, not inherent value.”

Look to the long-term security of your 401(k) over the next 25 years as a safe haven for your retirement. You can only occupy one room at a time, one day at a time and, hopefully, one worry at a time.

Spending more than you can afford to lose in Bitcoin, allowing your emotions to rule your finances, and trying to time the market may lead to greater disappointment.

You want out now, but what will you do if you are given an out? My best guess is your fears and anxieties would find a new place to set up shop. Work gives you structure, a purpose and hopefully the kind of social interaction that makes us all feel like we are contributing something to the larger community.

Be careful of exit strategies that appear too good to be true.

Updated: 6-28-2022

‘Bitcoin Jesus’ Roger Ver Spars With Crypto Exchange CoinFlex Over Margin Call

* Coinflex Says Served Ver Notice Of Default On $47 Million
* Investor Denies He Defaulted On Debt Owed To Coinflex

A public dispute between a longtime crypto investor and a digital-asset exchange is the latest in a series of mini-crises that have rocked crypto markets in recent weeks.

CoinFlex, a crypto exchange, on Tuesday named Roger Ver as the counterparty who failed to pay $47 million of stablecoin in a margin call. CoinFlex had previously disclosed a liquidity issue that led to the exchange pausing withdrawals.

CoinFlex CEO Mark Lamb said in a tweet that the company served Ver, who is an investor in the exchange and was an early promoter of Bitcoin, with a notice of default.

Roger Ver owes CoinFLEX $47 Million USDC. We have a written contract with him obligating him to personally guarantee any negative equity on his CoinFLEX account and top up margin regularly. He has been in default of this agreement and we have served a notice of default.

— Mark Lamb (@MarkDavidLamb) June 28, 2022

“I have no debt to CoinFlex,” Ver told Bloomberg in an emailed statement. Later, he tweeted that “some rumors have been spreading that I have defaulted on a debt to a counter-party,” without naming CoinFlex specifically.

Ver said the rumors weren’t true, instead saying the counterparty owed him “a substantial sum of money, and I am currently seeking the return of my funds.” Lamb in turn responded on Twitter, saying Ver’s tweet is factually incorrect and CoinFlex owes him no funds.

Recently some rumors have been spreading that I have defaulted on a debt to a counter-party. These rumors are false. Not only do I not have a debt to this counter-party, but this counter-
party owes me a substantial sum of money, and I am currently seeking the return of my funds.

— Roger Ver (@rogerkver) June 28, 2022

A broad-based selloff in digital assets and the collapse of high-profile tokens have caused ripple effects across the industry.

Major lenders Celsius Network and Babel Finance have frozen withdrawals, and Three Arrows Capital, a crypto hedge fund, is also facing liquidity troubles that have rattled investors.

CoinFlex on Monday announced a plan to make up the shortfall triggered by the default by issuing a new token that will offer a 20% annual return. The resumption of withdrawals, targeted for June 30, will depend on the level of demand for the new tokens.

Ver earned the nickname “Bitcoin Jesus” for proselyting about the world’s largest cryptocurrency in its early days. He has invested in several Bitcoin-related startups, and has become one of the most vocal advocates of Bitcoin Cash.

He is co-founder and investor at Blockchain.com, a crypto wallet and an exchange which recently raised a round of funding. In a YouTube video last year with Lamb, Ver discussed the yield earning opportunities at CoinFlex.

Founded in 2019, CoinFlex is a smaller crypto exchange focusing on derivatives trading, with less than $200 million in total value locked, according to its website.

In a previous update, CoinFlex said while it would typically liquidate any negative equity account, the client at issue had a non-liquidation recourse account. No other accounts are in negative equity, it added.

Updated: 6-29-2022

It’s Time To Refocus On Crypto Infrastructure, CoinShares CSO Says

CoinShares CSO Meltem Demirors finds crypto infrastructure and developer tools more interesting than Web3 and the money aspect of crypto during the current bear market.

The ongoing cryptocurrency market decline is the right time for the community to strengthen infrastructure fundamentals, according to the chief strategy officer at the European digital asset manager CoinShares.

CoinShares is one of the largest digital asset investment firms in Europe, with net assets exceeding $260 million by the end of 2021.

According to CoinShares’ latest fund flows weekly report, digital asset investment products saw outflows totaling $423 million last week, the largest since records began by a wide margin.

The report noted that the outflows were likely responsible for Bitcoin’s (BTC) decline to $17,760 on June 18, marking the lowest price level recorded since 2020.

A more resilient infrastructure of crypto and decentralized finance will not only help ensure security but also would enable more decentralization, Demirors said in an exclusive interview with Cointelegraph on June 9.

According to CoinShares CSO, the current crypto infrastructure is very much dependent on centralized service providers like Amazon Web Services and others. There’s a lot of ways to build peer-to-peer networks to perform computations, have better telecommunications, better broadband connectivity and decentralize and make the energy grid more resilient, the exec said.

“I come from the oil and gas industry and infrastructure investing so for me it’s fun to sort of go full circle but to embed crypto economics and some of these principles of decentralization into infrastructure investing to make our global systems more resilient,” Demirors noted in the interview.

Demirors also mentioned that she’s very excited about decentralized identifiers and verifiable credentials, along with using Bitcoin as a communication protocol. She stated that a higher infrastructure level would make crypto more resilient to attacks and vulnerabilities that come from the “fact that bits and bytes require atoms to function,” adding:

“We’ve been so focused on tokens and money and Web3. I think it’s time to refocus on the underlying infrastructure layers that make all of that possible and really think about how we make crypto more resilient.”

Crypto Hedge Fund Three Arrows Gets Liquidation Order

* Plans Asset Sales Including Holdings In Crypto Startups
* Teneo Partners Appointed By Court To Handle Liquidation

A British Virgin Islands court ordered the liquidation of Three Arrows Capital, the crypto hedge fund that bet big on everything from Bitcoin to the ill-fated Luna tokens and then succumbed to a $2 trillion wipeout of the digital-asset markets.

The court, which made the order on Monday, has appointed two partners at consulting and advisory firm Teneo to handle the liquidation, according to a person familiar with the matter, who declined to be identified because the information is confidential.

Teneo will oversee talks with potential buyers that may be interested in Three Arrows’s remaining holdings, such as tokens or equity stakes in crypto startups, the person added. A website will be set up to locate creditors and determine who is owed what.

Three Arrows has invested in a range of decentralized finance platforms such as Aave and dYdX, as well as crypto infrastructure firms such as StarkWare, according to its website. It’s not immediately clear what or how much of these holdings will be subject to a sale.

The court order brings down the curtain on one of crypto’s most famous hedge funds, founded by Zhu Su and Kyle Davies, former Credit Suisse traders, at the kitchen table of their apartment in 2012.

Their fortune rose along with the crypto market bull run, and Three Arrows’ assets under management were estimated to be about $10 billion in March, according to blockchain analytics firm Nansen. In April, Zhu said the fund is planning to move its headquarters to Dubai from Singapore.

Three Arrows has become emblematic of the industry’s excesses during last year’s bull run, when firms built up the leverage that hobbled them as the market turned.

This month, a cryptic tweet from Zhu hinted at Three Arrows’s reversal of fortune and growing plight, setting off a market spasm.

We are in the process of communicating with relevant parties and fully committed to working this out

— Zhu Su (@zhusu) June 15, 2022

The liquidation of Three Arrows “will present a setback to the industry’s policy efforts and ongoing engagement in DC,” said Ryan Selkis, co-founder of Messari Inc., a crypto data and research platform. “Many of the centralized institutional leaders in the space had poor risk controls, and put customer funds at risk.”

The fund’s liquidity crunch is among a series of crises that rippled through the battered crypto sector during this year’s downturn, including the implosion of the TerraUSD stablecoin and liquidity issues at lenders Celsius Network and Babel Finance.

Three Arrows’s woes have hit firms such as crypto broker Voyager Digital Ltd., which this week said it issued a notice of default to Three Arrows after failing to get repayment on a loan worth roughly $675 million.

Earlier, crypto lender BlockFi and prime brokerage Genesis said they had to liquidate one of their large counterparties recently, without naming the counterparty.

Three Arrows’ fund is incorporated in the British Virgin Islands. The Commercial Court there orders a company to be liquidated if it is regarded as insolvent because it cannot pay its debts. Companies can also voluntarily liquidate, though that’s less common.

Sky News reported on the liquidation order earlier.

Updated: 6-30-2022

Bitcoin Nears Worst Monthly Losses Since 2011 With BTC Price At $19K

Bitcoin price action will seal monthly losses over 40% for the first time in 11 years if it closes at $19,000.

Bitcoin (BTC) drifted further downhill into the June 30 Wall Street open as United States equities opened with a whimper.

U.S. Dollar Returns To Multi-Decade Highs

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it abandoned $19,000 to hit its lowest in over ten days.

Bulls failed to preserve either $20,000 or $19,000 at the hands of limp U.S. stock market moves, the S&P 500 and Nasdaq Composite Index down 1.8% and 2.6%, respectively, at the time of writing.

At the same time, the U.S. dollar once again staged a comeback to fix a trajectory toward twenty-year highs seen this quarter.

The U.S. dollar index (DXY) was above 105.1 on the day, coming within just 0.2 points of its highest levels since 2002.

“The US dollar (DXY) looks set to test highs last seen in December 2002 as the short-term downtrend is broken convincingly amid risk markets’ continued crumble,” researcher and trader Faisal Khan summarized on Twitter.

Data on inflation, meanwhile, once more suggested the worst could be behind the market.

Peak #inflation? The inflation rate most closely watched by Fed showed that price pressures were a bit tamer: May PCE was a bit soft, w/headline +6.3% YoY (flat vs April, below +6.4% expected) & core +4.7% (from +4.9% in Apr & below +4.8% forecast). Bonds rally w/US 10y down 7bps pic.twitter.com/FFgb6du6dS

— Holger Zschaepitz (@Schuldensuehner) June 30, 2022

As Cointelegraph reported, however, central banks began to acknowledge that the low rates seen before COVID-19 may never return.

Bulls’ Worst Month In 11 Years

With the majority of on-chain metrics now at historic lows, price data hinted how far BTC could theoretically go in a bear market increasingly unlike the rest.

Should it close at current levels of $19,000, BTC/USD would seal monthly losses of over 40% for June 2022.

That would make it the worst June ever and the heaviest monthly losses since September 2011, data from TradingView and on-chain monitoring resource Coinglass confirms.

Even March 2020 and the 2018 and 2014 bear markets were less severe on monthly timeframes. Forty percent drops were last seen when BTC/USD traded at $8.

80,000 Bitcoin Millionaires Wiped Out In The Great Crypto Crash Of 2022

The crypto crash has seen the number of Bitcoin millionaires decline by more than 75% since November last year.

More than 80,000 Bitcoin (BTC) investors have had their millionaire status revoked due to the crypto market downturn, but lower prices mean the number of whole coiners is growing.

Back on Nov. 12, just days after Bitcoin hit a new all-time high of around $69,000, a total of 108,886 BTC addresses reported a balance greater than $1 million, according to data from BitInfoCharts.

Fast forward to the present day, with the price of Bitcoin struggling to hold above $20,000, a mere 26,284 addresses are reported to contain holdings valued at upward of $1 million, meaning that the number of paper millionaires has declined by more than 75% throughout the last nine months.

The dramatic decline in the price of the flagship cryptocurrency has also impacted the number of whales — those who boast a Bitcoin wallet worth more than $10 million.

While there were 10,587 addresses with a minimum cash value of $10 million in Nov. last year, just 4,342 hold the same status today, a decline of 58%.

Despite the decline in the net worth of former BTC millionaires, the bear market has seen more than 13,000 new “wholecoiners” — a wallet that contains one or more BTC — added to the market, bringing the total number of wholecoiners to just over 860,000.

This significant spike in the number of whole coiners would suggest that retail investors are accumulating large amounts of BTC while prices tank.

Adding further credibility to the retail accumulation narrative, more than 250,000 addresses have added 0.1 BTC, or $2,000 at the time of writing, or more to their holdings over the past 20 days, according to data from Glassnode.

Bitcoin and the rest of the digital asset market have been negatively impacted by a number of different issues, including increased regulatory scrutiny, sustained geopolitical unrest, rising inflation and interest rate hikes.

Due to the increasing uncertainty around the stability of global markets, commentators seem to agree that the price of risk assets like Bitcoin could continue to suffer over a longer time frame.

At the time of writing, Bitcoin is changing hands for $20,005, down 1.63% in the last 24 hours and 37% over the last 30 days, with a total market capitalization of $382 billion, according to data from CoinMarketCap.

CoinFLEX Withdrawals Remain Halted As Recovery Token Talks Continue

The company had initially hoped to resume withdrawals on Thursday.

Withdrawals from crypto futures exchange CoinFLEX will remain suspended as the company continues to hold discussions with investors about a recovery token.

“We continue to talk with investors interested in rvUSD and commitments are growing,” CEO Mark Lamb said in a blog post Thursday. “Once the token sale is fully committed, we will be able to communicate a clear path towards enabling withdrawals, but until then they will remain suspended.”

CoinFLEX said earlier this week it was hoping to raise $47 million via a token sale after a certain individual’s account – Roger Ver, according to Lamb – went into negative equity during recent market volatility. The fundraising process at that time was hoped to be completed by July 1 (Friday).

“The goal is to do everything possible to avoid haircuts to customer funds,” said Lamb in his note today.

Custodia Bank’s CEO Says Bad Actors And Regulators Caused Crypto Crash

Caitlin Long said the use of leverage spelled trouble for the industry.

The crypto crash was foreseeable, Custodia Bank CEO Caitlin Long said on CoinDesk TV’s “All About Bitcoin.”

The signs of leveraging bitcoin and cryptocurrencies have been around since 2018, Long said Thursday, and while she wishes the lesson of leveraging digital assets had been heeded, regulators are still to blame for not cracking down on bad actors sooner and for not approving good companies and products in the industry.

“They [regulators] haven’t been greenlighting the good players as they needed to be,” Long said. “And also, they haven’t been prosecuting the bad guys as they needed to be.”

Long said that Grayscale Bitcoin Trust (GBTC), one of the few Securities and Exchange Commission (SEC)-approved funds for investors to gain exposure to bitcoin via their brokerage accounts without the need to buy, store or safeguard their BTC, ultimately “brought in a whole bunch of hedge fund money and wreaked havoc on the industry and really destroyed value.” Greyscale is owned by Digital Currency Group, which also owns CoinDesk.

In that situation, because of an imbalance between supply and demand, GBTC’s price traded far above bitcoin’s (BTC) market price, acting like a hedge fund that brought in significant amounts of leverage, Long said. Retail investors bought in, but only until the SEC approved competing products.

Once competition creeped in, closed-in funds like GBTC reversed course and began to trade at a discount to their net asset value.

On Friday, Grayscale filed a lawsuit against the SEC after the agency rejected Grayscale’s application to convert GBTC into an exchange-traded fund.

“My gut tells me that there are some folks at the SEC who wish that had never happened because it took them over six years to greenlight another product to compete,” Long said. “Therefore that premium sat out there and a lot of mom-and-pop investors got hurt by the whipsaw, as did the whole industry.”

While Long cannot pinpoint exactly what the SEC’s next move will be, she noted distortions in the market are caused by regulatory decisions.

She cited cryptocurrency market maker and lending firm Genesis Global Trading, as it faces nine-figure losses because of its exposure to crypto hedge fund Three Arrows Capital, which now faces collapse. (Genesis is owned by Digital Currency Group.)

And while questions remain surrounding companies that are still leveraging bitcoin, Long said that it could be good for the industry to “say good riddance to all of it.”

“I’d rather see it all go away,” she said, and instead, “rebuild it [the industry] based upon a non-leveraged business model.”

Sam Bankman-Fried Says He’d Consider Acquiring Troubled Crypto Miners Next

The FTX CEO said helping bail out crypto miners might help mitigate the credit contagion in the crypto sector.

FTX co-founder and CEO Sam-Bankman Fried is open to acquisitions of troubled crypto miners in order to help stem contagion in the crypto industry, he told Bloomberg in an interview Friday.

* “When we think about the mining industry, they do play a little bit of role in the possible contagion spread, to the extent that there are miners that were collateralizing borrows with their mining rigs,” Bankman-Fried said. “There might come along a really compelling opportunity for us – I definitely don’t want to discount that possibility.”

* To be sure, Bankman-Fried tweeted that he wasn’t “particularly looking at miners, but sure, happy to have conversations with any companies,” following the publication of the story.

* Private and publicly listed crypto miners are facing margin calls and defaults after having racked up debts anywhere between $2 billion to $4 billion to finance the construction of their gargantuan facilities across North America, according to data compiled by CoinDesk and industry participants.

* FTX just announced on Friday that it had made a deal with crypto lender BlockFi to provide BlockFi with a $400 million credit facility and potentially acquire it for as much as $240 million. And Alameda Research, which is owned by Bankman-Fried, had previously extended a cash/USDC loan of $200 million and a revolving credit facility for 15,000 bitcoin ($294 million) to beleaguered crypto exchange Voyager Digital.

* Shares of many publicly-traded mining companies are down by 75% or more year to date.

Voyager Digital Temporarily Suspends All Trading, Withdrawals And Deposits

Shares of the troubled digital broker plunged more than 26% in U.S. trading on Friday.

Crypto broker Voyager Digital (VYGVF) is temporarily suspending all trading, deposits, withdrawals and loyalty rewards, the company announced Friday. Even the Voyager-issued debit card will stop working for owners. The changes were effective as of 2 p.m. ET.

* “This was a tremendously difficult decision, but we believe it is the right one given current market conditions,” said Stephen Ehrlich, CEO of Voyager, in a statement. “This decision gives us additional time to continue exploring strategic alternatives with various interested parties while preserving the value of the Voyager platform we have built together. We will provide additional information at the appropriate time.”

* Voyager recently disclosed it had significant exposure to Three Arrows Capital (3AC) and had issued a notice of default to the beleaguered hedge fund. Voyager claims 3AC has failed to make require payments on its loan of 15,250 BTC ($294 million) and $350 million USDC. Voyager said it is actively pursuing all available remedies for recovery from 3AC, including through a court-ordered liquidation process in the British Virgin Islands.

* Shares of Voyager plunged more than 26% to $0.33 in Friday’s U.S. trading (shares of the firm’s main listing in Canada were not trading on Friday because of the country’s Canada Day holiday). Shares are down more than 97% year to date.

* Voyager had earlier received a cash/USDC loan of $200 million and a revolving credit facility for 15,000 bitcoin ($294 million) from quantitative trading firm Alameda Research, which is owned by FTX CEO Sam Bankman-Fried, to safeguard Voyager’s customer assets.

Updated: 7-4-2022

Bitcoin Hints At A Bottom, But It May Be Different This Time

* Token’s 60% Drop Closed Out One Of Worst Quarters In History

* AUM For Crypto Investment Products In June Reached Record Low

It’s a perennial exercise whenever an asset is mired in a prolonged and deep drawdown: People look at the charts, they go over this or that indicator and they get their checklists out to try to figure out when it might find a floor.

For Bitcoin, there’s plenty of such action happening right now, with technical signals that in the past have suggested just such a formation.

Analysts at Glassnode track a number of gauges — from instances when Bitcoin dips below a moving average to when it closes below the so-called balance price measure, which reflects a market price that matches the value paid for coins minus the value ultimately realized.

What they’re seeing now is that many of these measures are all flashing in similar fashion, something that rarely happens.

Over the last five years, the analysts say, there have only been six other similar stretches, some of which have coincided with bear-market bottoms, such as in November 2018 and March 2020. But might this time prove otherwise?

“The case for Bitcoin bottom formation is one grounded in observable dominance of strong-hand investors, historically significant lows in numerous macro oscillators, and a strong confluence with prices hovering in striking distance of several bear-market pricing models,” Glassnode’s analysts wrote. “However, can these HODLers hold the line?”

Bitcoin on Thursday closed out one of its worst quarters on record, giving up 60% in the April-June stretch. The coin had through Friday lost 70% in value since its November high. In this environment, Bitcoin spot trading activity has dropped “substantially,” according to Arcane Research.

Meanwhile, assets under management for crypto investment products in June reached a record low, with ETFs experiencing the largest drop – that category saw declines of more than 50% to $1.3 billion, according to CryptoCompare.

Bitcoin advanced 2.9% on Tuesday morning in Europe to break above the $20,000 level.

The usual culprits were to blame: a Federal Reserve bent on raising interest rates to tamp down inflation, even if it injures the economy; a selloff across multiple asset classes and souring sentiment; and a growing list of crypto firms, lenders and hedge funds maimed by the downturn. Pantera Capital’s Dan Morehead said recently that there are likely to be more “major meltdowns” in the coming months.

Ross Mayfield, investment-strategy analyst at Baird, says that a lot of the pain so far has already been priced into crypto — or at the very least Bitcoin. But, “that’s not to say it can’t go much lower in the near term because the Fed will continue to raise interest rates, and if we enter a recession, there will be even less appetite for highly risky and speculative assets,” he said by phone. “It’s definitely facing a challenging environment going forward,” Mayfield added.

On-chain activity tends to be high during bull markets and further increases during market crashes as participants scramble to offload their positions, according to Arcane Research. When its price stabilizes at a low level, such activity then also tends to drop.

“It looks like we are in such a period right now,” wrote the firm’s Jaran Mellerud in a note. “The Bitcoin blockchain has gone into hibernation mode as the crypto winter marks its presence.”

"Better Days Ahead With Crypto Deleveraging Coming To An End" — Joker

One positive sign: Brett Munster at Blockforce Capital points out that typically during bear markets, coins get taken out of cold storage and deposited back onto exchanges, which can indicate an intent to sell. Right now, that’s not the case.

“Other than the ~80,000 coins that were dumped on the market by the Luna foundation in a failed attempt to defend the peg of UST, we have continued to see a steady flow of Bitcoin out of exchanges and put away for long-term accumulation,” Munster wrote. In addition, the number of wallets with a non-zero amount of Bitcoin in them has been growing, among other developments.

“Unlike in 2018, when the demand for Bitcoin did drop during that price crash, there are no signs of adoption slowing today,” he said. “Despite the recent price crash, Bitcoin’s fundamentals are arguably stronger now than any time in its history.”

Updated: 7-8-2022

Bitcoin ‘Tourists’ Have Been Purged, Only Hodlers Remain: Glassnode

Active addresses, entities and transactions on the Bitcoin network are all moving sideways while the number of wallets holding at least some of the assets continues to reach new highs.

So-called “market tourists” are fleeing from Bitcoin (BTC), leaving only long-term investors holding and transacting in the top cryptocurrency, according to blockchain analytics firm Glassnode.

In its July 4 Week Onchain report, Glassnode analysts said June saw Bitcoin have one of its worst-performing months in 11 years, with a loss of 37.9%. It added activity on the Bitcoin network is at levels concurrent with the deepest part of the bear market in 2018 and 2019, writing:

“The Bitcoin network is approaching a state where almost all speculative entities, and market tourists have been completely purged from the asset.”

However, despite the almost complete purge of “tourists,” Glassnode noted significant accumulation levels, stating that the balances of shrimps — those holding less than 1 BTC, and whales — those with 1,000 to 5,000 BTC, were “increasing meaningfully.”

Shrimps, in particular, see the current Bitcoin prices as attractive and are accumulating it at a rate of almost 60,500 BTC per month, which Glassnode says is “the most aggressive rate in history,” equivalent to 0.32% of the BTC supply per month.

Explaining the purge of these tourist-type investors, Glassnode revealed that both the number of active addresses and entities have seen a downtrend since November 2021, implying new and existing investors alike are not interacting with the network.

Address activity has fallen from over 1 million daily active addresses in November 2021 to around 870,000 per day over the past week.

Similarly, active entities, a collation of multiple addresses owned by the same person or institution, are now approximately 244,000 per day, which Glassnode says is around the “lower end of the “Low Activity” channel typical of bear markets.”

“A retention of HODLers is more evident in this metric, as Active Entities is generally trending sideways, indicative of a stable base-load of users,” the analysts added.

The growth of new entities has also dived to lows from the 2018 to 2019 bear market, with the user-base of Bitcoin hitting 7,000 daily net new entities.

The transaction count remains “stagnant and sideways,” which indicates a lack of new demand but also means that holders are being retained through the market conditions.

Driving home its point, Glassnode concluded that the number of addresses with a non-zero balance, those that hold at least some Bitcoin, continues to hit all-time-highs and is currently sitting at over 42.3 million addresses.

Past bear markets saw a purge of wallets when the price of Bitcoin collapsed. Still, with this metric indicating otherwise, Glassnode says it shows an “increasing level of resolve amongst the average Bitcoin participant.”

Updated: 7-8-2022

Be Grateful For Crypto’s Well-Timed Meltdown

It’s offering some valuable lessons at relatively low cost.

With each passing day, the brave new world of cryptocurrencies is looking more like the perilous old world of Wall Street circa 1929 or 2008. Supposedly stable investments are proving to be anything but.

Specialized hedge funds, exchanges and bank-like entities are imploding, having made highly leveraged bets with other people’s tokens. Trillions of dollars in virtual wealth have vanished.

The right response? Relief that things didn’t get even worse.

Rarely has a crisis been so well timed: Crypto managed to boom and crash before it became too connected to the broader financial system. The damage has been limited mostly to those who, despite ample warning, chose to get involved. There’s no need for emergency intervention.

On the contrary, the bubble’s deflation, while it lasts, affords regulators and investors a unique opportunity to reflect and act on the lessons learned.

"Better Days Ahead With Crypto Deleveraging Coming To An End" — Joker

So What Are Those Lessons? A Few Come To Mind:

* Crypto is not an asset class. Stocks and bonds have cash flows. Commodities have industrial uses. Digital tokens have nothing but sentiment. Someday, they might prove useful as representations of assets, making transactions cheaper and more reliable.

As things stand, buying them is pure speculation, not investment. They’re worth no more than you’re willing to lose, and certainly have no place in pension funds or retirement accounts.

* Don’t let the financial system get too exposed. If big banks had made a lot of crypto-backed loans with regular folks’ deposits, the crash would‘ve been a lot worse. Regulators have rightly leaned against this, and should move ahead with rules to ensure it doesn’t happen in the future.

Officials should also limit the threat posed by stablecoins, digital tokens that purport to be worth a dollar. These should be backed by actual dollars held at the Federal Reserve, not by other crypto or by loans to traditional companies, so they won’t trigger panics or a real-world credit freeze.

* Don’t try to run an economy on the stuff. Of all the governments experimenting with crypto, El Salvador has probably gone farthest. It required businesses to accept Bitcoin, and sought to encourage adoption by offering $30 worth to anyone who would sign up for its (notoriously glitchy) crypto payment app.

Most takers quickly spent the windfall and, quite sensibly, went back to using dollars. So far, the government has lost an estimated $59 million on the $106 million it spent on Bitcoin — small compared with annual revenue of about $8 billion.

Still, it’s a cautionary tale: If President Nayib Bukele had succeeded in converting El Salvador to Bitcoin, as he had hoped, the country’s already ample financial challenges would be much more severe.

Perhaps the speculative frenzy surrounding crypto will eventually give way to the development of truly valuable applications, as happened with the internet. For the time being, though, better to keep a safe distance.

Senior Editor David Shipley at davidshipley@bloomberg.net

Updated: 7-29-2022

Bitcoin Heads For Best Month Since October As PCE Inflation Surprises

Bitcoin is on track for its best month since October as a busy week for U.S. economic news ends with a fresh inflation surprise.

Bitcoin traded at $23,550 at 12:45 coordinated universal time (UTC) on Friday, representing a 3% gain on a 24-hour basis.

The cryptocurrency, however, was on track to end a three-month losing streak with at least an 18% gain – the biggest percentage rise since October. The relief could be attributed to speculation that inflation has peaked and the Federal Reserve could opt for slower interest rate hikes in the coming months.

Price Point

Bitcoin held steady even as fresh U.S. economic data showed the Federal Reserve’s preferred measure of inflation rose by more than expected in June.

The core personal consumption price index (core PCE) came in at 0.6% month on month, exceeding estimates for a 0.5% rise and accelerating from May’s 0.3% jump. The pace over the past 12 months was 4.8%, compared with expectations for a rate of 4.7%. The employment cost index rose 1.3% in the second quarter, versus the expected 1.2%.

While the data pointed to sticky inflation, the news barely impacted the dollar or U.S. Treasury yields, perhaps because markets remain focused on recession fears and prospects of slower Federal Reserve monetary tightening in coming months.

Pat Toomey Blames The SEC For Crypto Lending Platform Crisis

"Better Days Ahead With Crypto Deleveraging Coming To An End" — Joker

A crypto-friendly legislator believes the SEC’s regulation-by-enforcement approach to be ineffective.

According to Senator Pat Tomey, famous for his vocal support for the crypto industry, the United States Securities and Exchange Commission (SEC) could have prevented the loss of $12 billion in assets by investors who trusted Celsius, a crypto lending platform, that froze their deposits in June.

An official letter from Toomey to SEC Chairman Gary Gensler, dated by July 26, suggested that the Commission’s inability to clarify how it would apply existing securities laws to digital assets and services drew undesirable repercussions. As Toomey writes:

“Companies could have adjusted product offerings accordingly, preventing investor losses today, and the SEC would have been free to focus enforcement efforts on the worst actors.”

According to Toomey, the SEC didn’t properly explain how the Howey and Reves tests applied to crypto lending platform products that paid interest to customers making crypto deposits. Instead, he emphasized, the SEC is choosing to regulate by selective enforcement.

"Better Days Ahead With Crypto Deleveraging Coming To An End" — Joker

The senator mentioned the recent insider trading charges against a former employee of Coinbase, claiming that the SEC had a clear opinion on the securities’ status of these assets, yet did not disclose that view publicly before launching an enforcement action.

Starting from a dubious presupposition that most digital assets are securities, he notes, the SEC both makes it difficult for well-intentioned companies to comply and does provide great protection for customers with its regulation-by-enforcement style.

As a result, the SEC’s continued refusal to give regulatory clarity to the crypto community, combined with “an apparently sluggish enforcement pace” harms investors and innovation in general, according to Toomey.

In conclusion, Toomey poses nine questions to Gensler, requesting a response by Aug. 9. Among them is a request that the SEC publicly identify other major crypto lending companies not registered under the SEC; explain why the SEC has not included 16 out of the 25 digital assets traded by the Coinbase employee in its charges and others.

On May 10, Toomey revealed his support for the Stablecoin Innovation and Protection Act, which would allow the Federal Deposit Insurance Corporation to back stablecoins in a manner similar to fiat deposits.

Updated: 7-31-2022

Bitcoin Due ‘One Of Greatest Bull Markets’ As July Gains Circle 20%

The future for Bitcoin price action may be much more bullish than the short-term charts, says Bloomberg Intelligence’s Mike McGlone.

Bitcoin (BTC) spoofed a breakout to fresh six-week highs into July 31 as a showdown for both the weekly and monthly close drew near.

“Bart Simpson” Greets Traders Into BTC Monthly Close

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD canceling out all its gains from early in the weekend, dropping from $24,670 to $23,555 in hours.

The resulting chart structure was all too familiar to long-term market participants, creating a “Bart Simpson” shape on hourly timeframes.

Liquidations nonetheless remained manageable, with the cross-crypto tally totaling $150 million in the 24 hours to the time of writing, according to data from analytics resource Coinglass — less than on previous days.

For popular trader and analyst Rekt Capital, there was no reason to believe that the coming weekly candle close would confirm that Bitcoin had reestablished a key trendline as support after weeks of failure.

Looking forward, however, not everyone was convinced that the current market strength had much room left to continue.

In one of various Twitter posts over the weekend, Material Scientist, creator of on-chain analytics resource Material Indicators, eyed funding rates on derivatives platforms turning increasingly positive, indicating too strong consensus that prices could go up unchecked.

“Negative funding has almost completely reset, just like in late March. We might even see positive funding on some alts soon,” he wrote:

“I think there’s one final pop into the shaded area before the bear rally fizzles away.”

Nonetheless, BTC/USD was still on track to deliver approximately 19% monthly gains for July, these starkly contrasting with any other month of the year so far.

According to data from Coinglass, July’s returns were even poised to be Bitcoin’s best since the 2021 all-time highs.

One Of “Greatest Bull Markets” Could Now Await Bitcoin

Other perspectives paid little attention to the prospect of a fresh correction in the short term.

Eyeing potential performance in the second half of 2022, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, left little doubt as to how Bitcoin in particular would fare.

Hints that the Federal Reserve would address rate hikes on a “meeting by meeting basis,” as per Chair Jerome Powell this week, “may mark the pivot for #Bitcoin to resume its tendency to outperform most assets,” he argued on social media.

“July marked the steepest discount in Bitcoin history to its 100-and 200-week moving averages, with implications for it to recover,” he added about the 200-week trendline:

“I see risk vs. reward tilted favorably for one of the greatest bull markets in history.”

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