Bad News and Good News on the BTC Charts
Bitcoin moved below $20,000 this weekend. And $20,000 isn’t just a big, round number. It had also been the 2017 all-time high, as Glassnode noted in their Week On-Chain Newsletter Monday.
At those prices, BTC investors “are now at a loss and holding coins below their cost basis on average.” That goes for the market overall, short-term holders AND long-term holders. Painful, indeed.
Key metric: This analysis starts with Realized Price, a basic measure of investors’ cost basis. It can be a major psychological “line in the sand” driving the price action, and we follow it closely in our updates like to our Crypto Investor Network.
The silver lining: Comparing past events where everyone suffered losses, Glassnode finds: “Previous instances where all three cohorts are at an unrealized loss have coincided only with late-stage bear market capitulations.”
And, well, it’s only once investors capitulate that prices can stop dropping like a rock…chop sideways for a while…and eventually turn back into a bull market.
For what it’s worth: Bitcoin miners are capitulating, too, says Glassnode. Interestingly, mining stocks like Argo Blockchain (NASDAQ:ARBK) – plus other “crypto stocks,” like Coinbase (NASDAQ:COIN) and MicroStrategy (NASDAQ:MSTR) – are among the biggest gainers today. Get the bottom line on stocks like these with Louis Navellier’s free Portfolio Grader (refreshed daily).
Solana Could Be in Big Trouble From DeFi
Crypto governance may sound like a boring topic – but not in a bear market! In this proposal on Sunday, Solend (a major Solana DeFi) admitted that it needed “to mitigate risk imposed by a user with a large margin position.” And quickly!
How? By “temporarily tak[ing] over the whale’s account so the liquidation can be executed OTC.”
“The situation has put the crypto lending platform into a gruesome dilemma,” as Cointelegraph summed it up yesterday. “It would show that anyone’s assets can be confiscated within the platform and could cause a boycott.
“On the other hand, if the Solend team is not able to mitigate the risks surrounding the whale’s account, some believe it can trigger a Solana meltdown, causing SOL’s price to dump heavily.”
Early this morning, Solend announced they got in touch with the user and were “working things out,” although they still need “a long-term plan.”
Decision-makers in the Solana ecosystem have to be keeping a sharp eye on this trend, too: the total value locked (TVL). Basically, how popular the blockchain itself is – not just its cryptocurrency.
Solana had overtaken its closer competitor, Avalanche (AVAX-USD), last summer… But that sharply reversed in 2022. Now, even after both chains have bled TVL, Avalanche still has a lead on most of the other popular “Ethereum killer” investments.
Surprisingly: Solana prices aren’t reacting to this situation as I write – SOL is up 12% in 5 days. But we wanted our readers to be aware and factor this into any buy, sell, or hold decisions.
FTX Rides To The Rescue
“Crypto banks” are still under close scrutiny, given the waterfall of users cashing out their crypto. And this morning, we learned that BlockFi is the latest to need assistance.
By “assistance,” I mean that BlockFi is borrowing a cool quarter-billion from its fellow crypto exchange FTX (FTT-USD):
— Zac Prince (@BlockFiZac) June 21, 2022
Last we heard from FTX and Alameda Research (both founded by Sam Bankman-Fried):
- A whole bunch of its FTT crypto was sent to Three Arrows Capital, the failing crypto hedge-fund and venture-capital firm. 3AC got $352 million worth on Thursday, fueling rumors that FTX was bailing it out.However, FTX and other creditors ended up liquidating 3AC’s positions on Friday, so that’s that.
- Voyager (VGX-USD) – another of FTX’s peers in the crypto-trading business – was borrowing $200 million from Alameda, plus it’s opening a 15,000 BTC credit line, as it announced Friday.
- Celsius Network (CEL-USD) was sending $247 million of its users’ Wrapped Bitcoin (wBTC-USD) to the FTX exchange to try and get some liquidity.
“I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion,” Bankman-Fried told NPR on Sunday. “Even if we weren’t the ones who caused it, or weren’t involved in it, I think that’s what’s healthy for the ecosystem. And I want to do what can help it grow and thrive.”
You may recall: Sam Bankman-Fried – worth $20 billion at age 30 – once pledged to give away “the majority of his wealth.” So, maybe it’s fitting that his companies are “redistributing” some of their hoard of venture capital now, to bolster the industry. Here’s hoping it helps!
Quote of the Day
“Bitcoin does this ‘thing’ every few years. It booms. It crashes. Then it bottoms. And it creates the best investment opportunities in the history of the financial markets.”
– Luke Lango & Charlie Shrem, Crypto Investor Network
For now, Luke and Charlie “continue to preach patience” as we see whether bitcoin can bottom around $20,000…or whether it’ll be more like $10,000.
And for those altcoins built on a solid foundation – projects with real utility to attract lots of users – the result is a mouth-watering discount.
Luke, Charlie, and our whole crypto team are putting their heads together now – to issue their next buy alert Wednesday, June 22.
On the date of publication, Ashley Cassell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. To have more news from The New Digital World sent to your inbox, click here to sign up for the newsletter.