Bitcoin Looks to Stabilize After Sharp Sell-Offs

Only once BTC finds a floor can the alts hope to do the same.

View or listen in browser June 17, 2022 Bitcoin Looks to Stabilize After Sharp Sell-Offs Dear Secret BTC Agent, By Sam Blumenfeld Bitcoin (BTC, Tech/Adoption Grade “A-”) and the broad crypto market had a rough week. The market leader is up 1% so far today, to $20,500, but the move is minimal compared to its 32% loss over the past seven trading days. Most crypto assets are struggling as investors face significant economic tightening. The Federal Reserve just levied its largest rate hike since 1994, and it’s beginning to remove liquidity from financial markets through its balance-sheet reduction program.  This has led to sharp sell-offs among risk assets in both crypto and traditional equity markets. Bitcoin was trading resiliently in a tight range between $28,000 and $32,000, but it broke down amid a series of negative news stories and liquidations dragging the market sharply lower. Prior to the correction, it was also  sitting right around its 21-day moving average before its precipitous fall this week. It’s unlikely BTC will be able to move past this short-term momentum indicator in the current environment.  Recent price action points to a tough road to climb for crypto assets. Altcoins — also called alts — will likely rely on Bitcoin to reestablish momentum, but its market dominance notably slid over two full percentage points since last week to 45% Here’s Bitcoin’s price in U.S. dollars via Coinbase Global (COIN): Our other market leader, Ethereum (ETH, Tech/Adoption Grade “A”), plummeted below its previous bull-market peak of $1,400 earlier this week. From there, it lost more momentum with the broader crypto market as it slid below $1,100.  $1,000 should act as an important psychological level. If ETH breaks below, it’ll likely signal additional weakness. Ethereum has continued its pattern of lower highs and lower lows. As a result, it’s trading substantially below its 21-day moving average of $1,625. A jump past this level is unlikely considering current sentiment. A more realistic positive development would be to see ETH stabilize and establish a new floor. ETH does have a potential positive catalyst coming up with its shift to proof-of-stake consensus. The asset quietly completed a successful merge of its Ropsten testnet, which was one of the necessary test runs before the main network makes the shift.  The full merge could happen as early as August. Here’s Ethereum’s price in U.S. dollars via Coinbase: Index Roundup The broader crypto market had a brutal seven-day trading week. All market capitalization groups were affected, and few names were spared. The Weiss 50 Crypto Index (W50) fell 29.64% as the broad market faced strong sell-offs. The Weiss 50 Crypto Ex-BTC Index (W50X) decreased 31.16%, proving Bitcoin slightly underperformed the market’s movement. Breaking down this week’s performance by market capitalization, we see that each of the market cap cohorts were similarly affected.  The large-caps lost the most this week, with the Weiss Large-Cap Crypto Index (WLC) dropping 33.03%. The mid-cap cryptocurrencies finished in the middle of the road, with the Weiss Mid-Cap Crypto Index (WMC) tumbling 30.73%. The smallest cryptocurrencies lost the least by a slight margin, but they still took heavy damage. The Weiss Small-Cap Crypto Index (WSC) slumped 30.73%. The crypto market has consistently slid since the beginning of May. It’s had very little momentum lately, so it’ll be important for traders to establish a new floor. Once that happens, it will be up to the large-caps to lead the way. Notable News, Notes and Tweets Pomp highlights that the U.S. national debt is a massive $30 trillion. The state-owned Russian gas company Gazprom Neft will look to mine Bitcoin using flare gas. Michael Saylor emphasizes Bitcoin miners’ impact on supporting the Texas power grid. What’s Next After hiking interest rates 75 basis points on Wednesday, the Fed won’t be slowing down anytime soon given the four-decade-high inflation sending consumer prices soaring. With a strong labor market, the Fed has the green light to hike rates until it sees progress with inflation … regardless of the impact that will have on financial markets. As we move further into the crypto winter, the market will continue facing strong headwinds from the Fed’s economic policy and a wave of liquidations hitting overleveraged crypto traders. However, despite the challenging short-term outlook for crypto asset prices, adoption is consistently progressing. The industry should make strides once the dust settles. Best, Sam   Follow us:   11780 US Highway 1, Suite 201, Palm Beach Gardens, FL 33408-3080, USA Would you like to edit your e-mail notification preferences or unsubscribe from our mailing list? Copyright © 2022 Weiss Ratings. All rights reserved.

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Threats of Insolvency Spook Investors

Liquidity crises are rampant in crypto right now, spooking investors ahead of the Fed's next rate hi

View or listen in browser June 15, 2022 Threats of Insolvency Spook Investors Dear Secret BTC Agent, By Alex Benfield The recent sell-off in the crypto market has put some big players in deep trouble as they've found themselves to be overleveraged. Obviously, Celsius' hot-water situation is well known. In addition to its potential insolvency status, Celsius is also at risk of liquidation on a large loan from Maker. It's had to deploy a ton of capital in the past 24 hours to pay down that debt and reduce its risk of liquidation, buying themselves a solid safety cushion. Now, rumors are swirling that another big crypto name, Three Arrows Capital, is potentially in a similar situation. Like Celsius, Three Arrows was also heavily invested in Terra (LUNA) — to the tune of nine figures. After the collapse, Three Arrows moved money into stETH — a liquid variant of ETH staked long term in ETH 2.0 — just like Celsius. Now that position is at risk, and there are worries that Three Arrows could declare bankruptcy. If even large, sophisticated firms like Celsius and Three Arrows can get blown up using leverage, that means leverage can be dangerous for anybody. Only ever use leverage with extreme caution! Especially as the Federal Reserve is looking to continue tightening the economy. Just today, the Fed confirmed a 75 basis-point hike following the Federal Open Market Committee (FOMC) meeting. This is the largest interest rate hike since 1994, which goes to show just how seriously they are taking this situation. It's safe to say rising inflation is a serious threat to the American economy. However, it's up for debate if markets have already factored in such a large hike … or if it'll send markets into a further tailspin. Bitcoin (BTC, Tech/Adoption Grade "A-") is trying to find support near the $20,000 level, but as the eight red daily candles in a row show, it's so far come up empty-handed. A close south of $22,000 today would make nine down days in a row.   BTC is severely undersold at the moment … and has been for some time. There's some support near the $20,000 level, but not much. It's still far too early to guess at what level that support might come in, but how BTC reacts to the rate hike could give us an indication of where the dust might settle. Likewise, Ethereum (ETH, Tech/Adoption Grade "A") has been incredibly vulnerable since breaking below support at $1,750 last Friday. ETH is in fact already trading below its previous bull market high near $1,400. It's possible that $1,400 could act as a support level should the markets bounce following the FOMC meeting. Conversely, if things drop further, ETH bulls will need to defend the $1,000 mark and keep ETH a four-digit asset because if they can't, it could fall as far as $750 on the next move. Here's ETH in U.S. dollar terms via Coinbase (COIN):   Notable News, Notes and Tweets Fidelity agrees that Bitcoin is very oversold at the moment. Ryan Sean Adams of Bankless thinks this bear market could be different from previous ones given the newfound maturity of the space. Sentiment has shifted to become very negative in recent days, and that's typically been a bottom signal in the past. What's Next There's no reason to examine altcoin charts right now. As long as both Bitcoin and Ethereum remain drastically oversold and struggle to find support, we won't see any meaningful moves in the altcoin space. The trend is your friend in crypto, and right now everything is trending downward. Until the two market leaders can find some relief, there's no sense in overcomplicating your trading strategy or searching for altcoin moon shots. Many signs are pointing toward a cease to the sell-off given just how long the selling has been going on, but the main factor here is what's going on with the Fed. Over the course of the next few days, we'll see where the dust settles. Once we do, we'll be able to alter our strategies from there. But if you're looking for a preview into strategies to prepare for the high inflation we're seeing, Dr. Martin Weiss is hosting a series of three emergency briefings. The first two are already available to watch. I suggest you check back in tomorrow for the third. Best, Alex Follow us:   11780 US Highway 1, Suite 201, Palm Beach Gardens, FL 33408-3080, USA Would you like to edit your e-mail notification preferences or unsubscribe from our mailing list? Copyright © 2022 Weiss Ratings. All rights reserved.

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Crypto Drops on Worries of Celsius Liquidity Crisis

And tomorrow's FOMC meeting might add to the heat.

View or listen in browser June 13, 2022 Crypto Drops on Worries of Celsius Liquidity Crisis Dear Secret BTC Agent, By Marija Matic Bitcoin (BTC, Tech/Adoption “A-”) closed last week below $28,800 and crashed to $23,000 today, dragging down the whole crypto market with it. While the bearish macroeconomic climate — which includes record-high inflation and expected rate hikes — has certainly put sustained downside pressure on the broad market, the latest round of fear, uncertainty and doubt (FUD) was dramatically triggered by the potential insolvency of the largest crypto lender, Celsius (CEL, Tech/Adoption Grade “C-”). Celsius announced today that it’s pausing all withdrawals, swaps and transfers between accounts. This action is “to put Celsius in a better position to honor, over time, its withdrawal obligations.” In plain English? This means Celsius isn’t liquid enough and will struggle to fulfill its obligations. In response, the price of its token, CEL, immediately dropped, falling over 50%. A more immediate concern for Celsius users is that the announcement didn’t clarify whether margin calls and liquidations were also frozen. If they aren’t, Celsius will liquidate the collateral of many users due to the drop in prices. This means that those who are able and eager to pay off their loans won’t be allowed to due to the freeze, and they’ll lose their collateral over a situation outside of their control. Adding to the frustration, users can’t withdraw their stablecoins from the platform to purchase crypto during the dip. This once again reminds us of the mantra related to centralized platforms: Not your keys, not your coins. There is always some risk when you give a third party custodianship of your crypto. Meanwhile, Nexo, a competing centralized platform, has offered to buy its beleaguered rival’s assets. Nexo said it’s "in а solid liquidity and equity position to readily acquire any remaining qualifying assets of Celsius, mainly their collateralized loan portfolio." The situation is ongoing as the offer is open until June 20. The magnitude of Celsius’ collapse could be far-fetched. It serves 1.7 million customers, whose $12 billion funds it’s been using in various DeFi protocols. Bitcoin already broke out of its month-old trading channel on the downside before Celsius’s announcement. Over the weekend, it slipped below support and fell to $23,500, as you can see in the BTC/USDT daily TradingView chart below.   This action was in expectation of a bearish two-day Federal Open Market Committee meeting, which starts tomorrow. Many are worried that the Federal Reserve might hike rates by as much as 0.75% to combat record-high inflation. Meanwhile, altcoins are bleeding, with those belonging to DeFi categories such as Farming-as-a-Service taking the largest beating. Ethereum (ETH, Tech/Adoption Grade “A”) led the way down, losing 30% in the past seven days. Its price crash started a few days ago with rumors of Celsius liquidating their stETH positions due to insolvency issues. stETH is a liquid variant of ETH staked long term in ETH2.0. But the heavy blow came when news that stETH had de-pegged from ETH. Losing pegs of course reminds people of the TerraUSD (UST, Stablecoin) collapse, and that panic pushed ETH’s price down to $1,180. Let me be clear here, however, that this situation is a bit different from UST. stETH doesn’t really have to be pegged to ETH the same way UST needed to maintain a peg to the U.S. dollar. Its value can be whatever market decides, and right now it’s at 0.95 ETH due to the focus on risks. And, in the end, 1 stETH should be redeemable for 1 ETH sometime after the merge. stETH is still collecting staking yield in the meantime, as well. The biggest problem with the stETH situation though is people that people have used it as collateral for loans. The drop in value can cause cascade liquidations, which, as I mentioned before, is already a concern for Celsius users. Meanwhile, weaker stablecoins like Tron’s USDD (USDD) have struggled today. The algorithmic stablecoin Neutrino USD (USDN) is currently trading at roughly97 cents. However, it’s relatively small and doesn’t pose a systemic risk to the system. Still, the failure of any stablecoin, no matter how small, would add to the fear on the market as the trauma from the UST collapse is still fresh in investors’ minds. Fortunately, the larger stablecoins — Tether (USDT), Dai (DAI) and Near’s USN (USN) — are holding their $1 peg well. USD Coin (USDC) had a brief wick to just over 97 cents but has quickly pegged back to exactly $1. Notable News, Notes and Tweets Bitcoin tumbles as crypto lender Celsius halts withdrawals. In this together: Musk and Saylor down a combined $1.5 billion on Bitcoin buys. Binance.us faces class-action lawsuit over Terra (LUNA) and UST sale. What’s Next? Crypto crashed on the fears of Celsius insolvency, coupled with unfavorable market conditions. $1 billion of long positions were liquidated in the past three days. On top of that, tomorrow’s FOMC meeting looms over the market as new rate hikes are expected to be announced. If the raise is as high as 75 basis points, there will be little to cheer for in the short term. In case of such news, there is little doubt that BTC will fall past support at $23,500. We may even see a test of the 2017 top. Of course, it’s difficult to view BTC outside of the broader market since the correlation with stocks jumped again, with Bitcoin remaining correlated to the Nasdaq and S&P 500 Index. Those markets have also been feeling the pain of the Fed’s quantitative tightening (QT) policy. We can’t really tell if BTC will be able to decouple since it’s still a relatively young asset, one which hasn’t existed in a true stock bear market or gone through a period of QT before. This will be a big test for Bitcoin. And it’ll be a test for all investors. Navigating this reality of high inflation and desperate Fed action is tricky. That’s why Weiss Ratings founder, Dr. Martin Weiss, is holding a series of emergency briefings this week exclusively for you. In them, he’ll map out what’s likely to happen next, recommend seven urgent steps for portfolio protection and reveal a breakthrough strategy for profit in times of crisis. These briefings are free to attend, but the deadline to register is tonight. I suggest you save your seat now before it’s too late. Best, Marija Matić Follow us:   11780 US Highway 1, Suite 201, Palm Beach Gardens, FL 33408-3080, USA Would you like to edit your e-mail notification preferences or unsubscribe from our mailing list? Copyright © 2022 Weiss Ratings. All rights reserved.

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BTC Keeps the Crypto Ship Steady as ETH Trades Near Critical Levels

The crypto market faces strong short-term headwinds, though the broad market is holding steady so fa

View or listen in browser June 10, 2022 BTC Keeps the Crypto Ship Steady as ETH Trades Near Critical Levels Dear Secret BTC Agent, By Sam Blumenfeld Bitcoin (BTC, Tech/Adoption Grade "A-") and the broad crypto market are trading lower following the release of May's Consumer Price Index (CPI) inflation data this morning. Consumer prices jumped 1% over the past month and 8.6% over the prior year — especially notable considering that many economists were hoping to see signs of peak inflation. Regardless, Bitcoin has traded resiliently since mid-May, remaining within a tight range of $28,000 to $32,000 while increasing its crypto market share, which is currently slightly over 47%. This is common during periods of uncertainty because investors flock to relative safe havens during market turmoil. Bitcoin should continue seeing inflows from trading pairs as investors exit more speculative altcoins. While Bitcoin's been hovering around its 21-day moving average for 10 consecutive days, it fell below the short-term momentum indicator during today's trading. Still, it's sitting well above the lower bound of its monthly trading range. Only a move below $28,000 or a jump above $32,000 would be notable considering recent price action. Here's Bitcoin's price in U.S. dollars via Coinbase Global (COIN):   Unlike Bitcoin, Ethereum (ETH, Tech/Adoption Grade "A") is trading at a critical level right now, which is concerning considering its extended pattern of setting lower highs and lower lows. The key level to watch is $1,725. A close below this level could cause the second-largest cryptocurrency to drag other altcoins lower. Ethereum has struggled to overcome its 21-day moving average, closing above it only once since the beginning of April. It's touched or briefly overtaken the level several times during the same period, but it continues to act as strong short-term resistance. Another close above it could send Ethereum back past $2,000, which would break its downward trend. Here's Ethereum's price in U.S. dollars via Coinbase:   Index Roundup There was enough downside price action even before today’s pullback — which isn’t reflected in the data below — to see the crypto market finishing the seven-day trading week in the red. However, the damage was relatively light. The Weiss 50 Crypto Index (W50) decreased 3.47%, as most of the market pulled back slightly.   The Weiss 50 Crypto Ex-BTC Index (W50X) declined 3.13%, as Bitcoin mostly matched the broader market’s performance.   Breaking down performance this week by market capitalization, we see relatively small differences between each segment. The large-caps narrowly held their value the best, as the Weiss Large-Cap Crypto Index (WLC) slid only 3.19%.   After logging the biggest gains last week, the mid-caps lagged the most by a small margin this week, with the Weiss Mid-Cap Crypto Index (WMC) slipping 5.06%.   The smallest cryptocurrencies finished in the middle of the pack, as shown by the Weiss Small-Cap Crypto Index (WSC) losing 3.75%.   The crypto market is struggling to gain momentum in the current neutral stage of the market cycle and difficult macroeconomic environment. Performance was mostly consistent throughout the broad market. But if we’re to see the market gain momentum again, the large-caps will need to make the first move. Notable News, Notes and Tweets Anthony “Pomp” Pompliano blames a lack of discipline from policymakers for the U.S.’ unchecked inflation. Bitcoin miners are looking to help Texas improve the state’s struggling power grid. A report from Blockware Intelligence forecasts that Bitcoin’s global adoption will reach 10% by 2030. What’s Next The crypto market faces strong short-term headwinds as 40-year high inflation prompts investors to avoid risk assets. This higher-than-expected inflation will likely cause the Federal Reserve to hike interest rates more aggressively, which compounds the desire to avoid speculative investments. Although conditions are volatile, the crypto market has managed to decouple noticeably from technology stocks this week. Bitcoin’s correlation with the Nasdaq 100 Index dropped below 0.5 for the first time in three months before falling all the way down to 0.25. Bitcoin decoupling from traditional financial assets is a good sign for its long-term independence. With adoption growing as expected, its potential should eventually reward early investors. Best, Sam Follow us:   11780 US Highway 1, Suite 201, Palm Beach Gardens, FL 33408-3080, USA Would you like to edit your e-mail notification preferences or unsubscribe from our mailing list? Copyright © 2022 Weiss Ratings. All rights reserved.

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