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Bitcoin and Ethereum fell below $18,000 and $1,000 respectively, Celsius Network and Three Arrows Capital were on the verge of bankruptcy, USDD lost par against the US dollar
Bitcoin and Ethereum fell below $18,000 and $1,000 respectively, Celsius Network and Three Arrows Capital were on the verge of bankruptcy, USDD lost par against the US dollar and other events of the week ahead.
The first cryptocurrency opened the week with a drop. On June 13, its price dropped below $23,000 and on Saturday it broke the $20,000 level and tested the range below $18,000.
Ethereum prices are also falling throughout the week. On June 18, the price of the asset has currently dropped to $881 (on the Binance exchange).
At the time of writing, Bitcoin is trading around $19,600 while Ethereum is trading around $1,060.
The flagships brought the rest of the market with them – its capital fell below $1 trillion. All major digital assets were in the red zone at the end of the week.
The fear and greed index panicked at about 8 points compared to March 2020 and Black Thursday values.
The week on the US stock markets began with a significant drop in shares of companies focused on the cryptocurrency industry: MicroStrategy, Coinbase, Silvergate Capital and others.
Due to the collapse of Bitcoin, MicroStrategy’s “paper” loss exceeded $1 billion, while El Salvador’s was $56 million. However, Michael Saylor said the analytics software provider predicted market volatility when choosing a strategy to invest in digital gold. He made sure the company was ready to hold more of the cryptocurrency.
Leading OTC platform Cumberland said its OTC chart is currently experiencing “the biggest flows of the year” but did not rule out further market dips due to the possible collapse of another leading stablecoin.
According to Glassnode, the fundamentals have broken and now even long-term cryptocurrency holders are suffering significant losses. Investors’ net realized loss was a record $4.2 billion.
Coin Metrics noted that during the crash, miners sent a record 88,000 BTC to cryptocurrency exchanges.
On June 13, crypto lending platform Celsius suspended withdrawals, swaps and transfers between accounts “due to extreme market conditions”. The project token reacted with a 50% drop.
According to experts, Celsius’ decision may be due to losses incurred when using high-risk DeFi tools, especially collateralized synthetic assets such as stETH from Lido and Wrapped Bitcoin. Another major portion of the platform’s funds is locked into the Ethereum 2.0 deposit contract and is illiquid until the transition to the Proof-of-Stake (PoS) algorithm.
Competitor platform Nexo has announced that it is ready to acquire Celsius’ loan portfolio. On June 15, the CEL token rose more than 50% amid data the company strengthened its debt positions.
The network also reported that Celsius has hired Citigroup to explore possible financing options, while prominent investors have not expressed a desire to bail out the company. Regulators in five states are believed to have opened an investigation into the incident.
Singapore-based hedge fund Three Arrows Capital (3AC), a major investor in industry-leading projects, has also begun liquidating assets to cover debts. Specifically, the fund began converting stETH to $1,000, the price of liquidating a position on the Aave protocol, against the backdrop of Ethereum’s collapse.
Su Zhu, co-founder of 3AC, made a vague comment on the situation, and the network began to speculate about the company’s bankruptcy. At the same time, Danny Yuan, head of 8 Blocks Capital, said that 3AC used $1 million of the company’s funds in serviced accounts to cover margin calls.
The fund is known to have spearheaded a $1 billion Terra funding round in the past and is one of the largest holders of Grayscale units at the end of 2021, which could signal significant losses.
The BlockFi landing platform has announced the liquidation of 3AC positions. Later it became known that the platform list is populated with BitMEX, FTX, Deribit and Bitfinex. Due to the scale of the hedge fund’s activities, the uncertainty in its operation has also affected other projects such as the Finblox staking platform. Some 3AC-funded players stated that they do not manage their assets.
Tether noted that although crypto lending platform Celsius is part of the investment portfolio, adverse events did not affect the financial stability of the USDT stablecoin issuer. Rumors of a loan to the Three Arrows Capital fund have been described as false by the company. At the same time, Tether dismissed speculation about the dominance of Chinese commercial paper reserves.
At the end of the week, 3AC co-founder Kyle Davis said the fund is exploring the possibility of selling assets and “financial assistance” from other companies, and is also trying to negotiate with creditors to delay payments.
At the end of the week, Babel Finance, one of the largest cryptocurrency lenders and asset managers in the Asian region, also announced a lack of liquidity due to market volatility and the suspension of payments and withdrawals from its own products.
As a result of the liquidation of positions in stETH by major crypto investors such as Alameda, Three Arrows Capital and Celsius, the synthetic asset has lost its link with Ethereum. Until Friday, only 0.935 ETH was offered for 1 stETH.
Since May, the total value of assets in the Curve protocol’s ETH/stETH liquidity pool has dropped from $4.5 billion to around $620 million. The instability of the pool is also putting pressure on the price: ~111,300 ETH makes up ~491,000 stETH.
On June 13, the algorithmic stablecoin USDD from Tron briefly lost the pair against the US dollar and fell to $0.97. The DAO behind the reserves of the Tron asset sent 700 million USDC to protect the stabilizer, but that didn’t help – on June 15 the rate dropped to $0.95.
Experts were concerned about the DAO’s activity – the conversion of reserves into floating assets in a declining market and the annual interest rate on stablecoin deposits falling from 30% to 10.9%.
Waves’ “stable coin” USDN rate also dropped significantly (to $0.76 on June 15). After that, South Korean exchange Upbit issued a warning to users about the risks associated with algostablecoins.
As the Tron market plummets, the DAO said it will 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.
The mass layoff trend 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.
CEO Brian Armstrong said that due to worsening market conditions, Coinbase will cut its staff by about 18%. Crypto lending platform BlockFi has announced that it will cut its more than 850 employees by around 20%.
Against the backdrop of a general negative trend, leading exchange Binance stands out. Its chairman, Changpeng Zhao, by contrast, announced the opening of 2,000 new vacancies, noting that winter is a good opportunity to prepare for the next bull.
This week, Jess Powell, CEO of Kraken cryptocurrency exchange, presented a document on the company’s corporate culture and invited any employee who disagreed with its content to resign.
The euro pegged stablecoin Euro Coin (EUROC) is backed by euro-denominated reserves held by financial institutions “within the US regulatory environment”. One such organization would be Silvergate Bank.
Initially, Euro Coin was released 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:
We are only a few months away from The Merge, the long-awaited update of the Ethereum network. ForkLog understood the features of the upcoming upgrade and its potential impact on investment attractiveness of the second-largest cryptocurrency based on capitalization.
Did you explain how Celsius, 3AC and stETH are linked and also talk about the impact of their potential bankruptcy on the market and the possible collapse of “stake ether”?
ForkLog’s tutorials covered what is Lido, liquid staking, and Web3. I found out what happened to the Celsius platform.
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Blockchain technology remains one of the hottest trends among financial, government and commercial organizations worldwide. ForkLog provides an overview of the most exciting new ventures.
On June 13, live ForkLog LIVE discussed market movements and much more with our guests:
This week, we also published a special report on how women will change the world of blockchain and cryptocurrencies.
Read ForkLog bitcoin news in our Telegram – cryptocurrency news, courses and analysis.
Source: Fork Log
I’m Sandra Torres, a passionate journalist and content creator. My specialty lies in covering the latest gadgets, trends and tech news for Div Bracket. With over 5 years of experience as a professional writer, I have built up an impressive portfolio of published works that showcase my expertise in this field.
