Crypto Market Weekly Recap - June Week3
Well, winter is finally here.
The total market cap of the Crypto market has fallen to over $800 billion. Bitcoin is finally below $20,000 and is currently trading around $18,000, down 73% from ATH ($68,000+). Ethereum is currently trading below $1,000, down about 80% from ATH ($4,800+).
Is this the BOTTOM? No one knows, but judging from the market reaction, most people think it will continue to go down. MVRV has also fallen to 0.84, a level lower than "312 Crash" in 2020 and the lowest level in almost two and a half years.
Could it get any worse?
I would like to share something with you, and what should you do in a bear market?
The same efforts in a bear market make you feel even more powerless, frustrated, and even lost. In a bull market, you spend a lot of time each day in an endless stream of information, either hoping to find Alpha or hoping to do something big. The up-only feeling in the bull market gives you positive feedback and you feel like your time was not wasted. You feel like you're growing and improving every day, and you've got more money in your pocket, and it's all so good.
But in a bear market, all your efforts and time spent are rewarded with more price drops. You might feel even worse because your feelings are amplified by the market's negative sentiment.
You begin to doubt yourself, and you either continue to do so, but suffer from increasing internal torture and self-doubt. More people choose to give up, feeling that the time spent is meaningless. Anger then is replaced by desperation, and finally, you become indifferent. You may even wonder what the hell you are doing.
I also saw a lot of people in the market who gave a lot of good advice, and a simple summary.
- Seriously re-evaluate your portfolio and either sell or hold. Once you've made your decision, hold on to it. Don't ever suffer from a loss or watch that meaningless number go up and down every day.
- Control the rhythm, you can slow down some speed appropriately. To control the amount of market information you obtain, there is no need to bury yourself in the endless flow of information every day as before, choose a few sources of information you like, and ensure that you can keep up with the market in the big rhythm.
- Learn, either learn the basics of Crypto, or find a good project recognized by the market. Before you may never understand what is going on, take this opportunity to figure it out. Do not cheat yourself, do not pursue speed, one by one project to figure out.
- Love life, exercise, travel, cook, spend time with your family, keep a positive and healthy mindset, and everything you do at Crypto is for the betterment of life. There is no need to wait until you are wealthy and free before you can enjoy life and be good to your family, start immediately.
You see, I am posting this advice. Is this a bottoming signal?
Go back and look at the various things that have happened in the market during this time.
3ac and Celsius - Victims of $UST / $LUNA
Or are they murderers instead of victims?
- First, $UST de-peg, a large number of $LUNA was minted, and then flowed to the market, making $LUNA going to zero.
- $LUNA and $UST are both over. 3ac invested $600 million $LUNA before that.
- 3ac' $600 million of $LUNA is worth $600. In fact, 3ac can afford it.
- While the market as a whole was brought to collapse, 3ac got several margin calls. Because previously 3ac borrowed a lot of money or issued products and then raised money to LONG, now they need more collateral.
- In order to cover the position, they sold, and then the market further declined.
- It is said that the major institutions have liquidated 3ac.
Then Celsius, too, put a lot of money in the $UST to make money.
- $UST went to zero, Celsius lost a lot of money.
- The assets deposited from users are also not profitable due to market reasons, and various wealth management products are not profitable, and there are problems with the mismatch of liquidity terms.
- Stop withdrawing and sell $stETH for liquidity, causing $stETH to plummet.
AEX, Babel Finance also suspended user redemption and withdrawal
AEX Exchange officially claims that it is a liquidity mismatch problem, insufficient liquidity for medium and long-term investments, and cannot meet the withdrawal demand of users in the short term, so it first stops withdrawal and then limits it. It will resume after the liquidity adjustment is completed.
Babel Finance is a lending company, theoretically, it shouldn't be that big a problem. But according to market news reports, they have quite high leverage on longs. Rumors say that they used to have $200 million in their pocket, while this time they are suffering a loss of $400 million.
Since the end of $UST, there have been a variety of situations. We're still only seeing news about big companies facing troubles. Just because those issues aren't being reported doesn't mean they aren't happening for smaller ones.
And these things have made us rethink CeFi vs. DeFi, and it's clear that the decent DeFi protocols are performing far better than the CeFi companies. Maker, AAVE, and COMP are operating largely intact in such a storm, while the centralized institutions are mostly suffering from liquidity mismatches or asset-side issues that are severely impacting their users.
So, does this mean that there is still hope for the third DeFi Summer?
Finally, study time.
Web5 - Jack Dorsey's TBD
TBD is a decentralized application platform, but not necessarily a blockchain platform. Web5 consists of three key components, namely Decentralized Identifiers, Verifiable Credentials, and Decentralized Web Nodes. Web5 is not a blockchain-dependent technology/network and will not have Token.
Maybe you still feel that TBD/Web5 is not very well understood, and I actually don't particularly understand it either.
But what I can summarize from the partial information so far is that what TBD wants to do is to build an underlying platform for the mobile apps we are using now, which can have a blockchain but does not depend on it.
The problem with blockchain is particularly big in terms of storage, for example you don't want to put all your chat messages on the chain. TBD, on the other hand, is trying to solve these problems with the blockchain and at the same time, get the data out of the hands of big companies in Web2. The whole platform is called Web5, and to do that, the first thing TBD solves is the problem of decentralized identity, DID.
- TBD Website: https://www.tbd.website/about
- TBD Deck: https://docs.google.com/presentation/d/1SaHGyY9TjPg4a0VNLCsfchoVG1yU3ffTDsPRcU99H1E/edit#slide=id.g11c16fe40c4_0_156
Some of the major events in Crypto in the past few days.
- Circle will issue Euro Coin ($EUROC), a stablecoin backed by the euro. Starting June 30, 2022, institutional customers will have access to Euro Coin through a free Circle account, and developers can now integrate with Euro Coin smart contracts.
- Celsius' $WBTC leverage in the Maker Protocol may face liquidation. The leverage has already been liquidated. Celsius has not yet resumed withdrawals, which is basically a death sentence and a loss for platform users. The only thing left to do is to see if there are any institutions willing to buy its assets.
- Three Arrows Capital, which has liquidated $400 million in total on the lending platform. Three Arrows Capital has also had a tough time in the last week, losing a lot of money due to the volatility of market prices. According to sources, the team has now been disbanded and the funds have been moved.
- Ethereum will undergo a hard fork upgrade to postpone the difficulty bomb by about 2-3 months. The Ethereum Geth client will release v1.10.19 and introduce the Gray Glacier hard fork, which is expected to go live on the mainnet at block height 15050000 (around the end of June) to postpone the difficulty bomb by about 2 to 3 months, and all users must update the version before the hard fork is activated.
- OpenSea is migrating to a new protocol Seaport, which is officially described as saving about 35% in gas fees when using Seaport for transactions. At the same time, Seaport supports OpenSea's build collection offer feature. In addition, Seaport will help OpenSea roll out new features for bulk purchases faster.
- The SEC has filed documents related to Bill Hinman's 2018 Ethereum Talk. Memos were submitted in three different categories. The first category includes emails from David Frederickson communicating legal issues; the second category is a June 2018 email with an attachment to a presentation with implemented legal advice from different parts of the SEC; and the last category is an email from TM, IM, and OGC attorneys with a draft from Seaman to Hinman.The SEC Documents have been filed in connection with Bill Hinman's 2018 Ether presentation.
- DeFiance Capital Founder Arthur Responds to Incident Affected by Three Arrows Capital. DeFiance Capital, a partner of Three Arrows Capital, has been significantly affected this time. However, the founder says the team is not down yet and is actively working to resolve the impacted issues. His behavior and actions with the team are consistent and will not change.
- Crypto lender BlockFi to lay off 20% of its workforce. The last two weeks have seen companies including Gemini, Klarna, Bitso and Coinbase lay off anywhere from 10-20% of their workforce, reflecting the impact of market conditions on the industry as a whole.
- Web3 game studio The Wildcard Alliance closed $46 million Series A funding round led by Paradigm, with participation from Griffin Gaming Partners and Sabrina Hahn. The Wildcard Alliance will publish Wildcard, a Polygon-based Web3 MOBA.
- Asian superstar Jay Chou stars in Paris Saint-Germain NFT promotional video. This week ends with Jay standing up for the Paris Saint-Germain NFT, which is not too expensive, for those interested.
This week's daily news roundup is here, in English and Chinese.