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The sell-off continues… and the dip just keeps on dipping.
Crypto collapse sees markets enter unchartered waters

Crypto collapse sees markets enter unchartered waters

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Crypto collapse sees markets enter unchartered waters

Overview

  • Monday the 13th 
  • BTC: Can the 2017 high provide support? 
  • Who’s buying during the sell-off? 
  • What to expect going forward. 

Monday the 13th

Dear Banter Fam,

Ouch, what a day. It just had to be on the 13th, didn’t it?

This most recent crash stands among the bloodiest days in crypto history. It may not be the most significant percentage drop we’ve ever seen, but the timing, not to mention the sheer amount of value that’s vanished, is extraordinary. Sellers forced the total market cap of crypto to fall a total of $US103b in two days, bringing it below the $US1 trillion mark for the first time since January 2021. That’s right. We are, once again, a sub-trillion-dollar asset class. 

To add insult to injury,  rumors are circulating that the Fed could be planning to raise interest rates by 75bps on Wednesday, and not the 50bps the market has been expecting.  Even the CME FedWatch Tool, which tracks probability percentages, was down all day because of excess traffic.   

Today’s Approach

While the market seldom experiences these days, it’s best to take the opportunity and see what it looks like under the hood. So we’ll use the newsletter to do just that. We’ll explore options, prices, dominance charts, and on-chain data to analyze the players in the market.  

Market update 🌍

We quickly got our answer from last week; the US$30k support failed to hold, and bitcoin (BTC) and the broader markets crashed with substantial volume yesterday. BTC fell -by 14.64%, the largest single-day fall since March 2020. The 2017 highs of 20k are the next significant level of interest. BTC completed the US session at US$22,431

High-resolution chart

Bitcoin: Exchange Netflow

While we’d expect BTC to be rushing onto exchanges at a moment of so-called capitulation, the very opposite was occurring, with nearly 40k bitcoin outflowing yesterday. Despite the volume and price drop, every sell order requires a buy, and it appears those buyers are removing BTC from exchanges and putting it into long-term storage. Nealy 70k bitcoins ($1.5b value) have left exchanges in the past week. If you’re part of this cohort, congratulations: you’re swimming with the whales.

BTC.Dominance

Surprisingly, BTC’s dominance broke its uptrend with a decrease of -3.52%. BTC tends to climb during selloff events, but traders bypassed the safety of BTC today in favor of stablecoins, and USDT Dominance (USDT.D) rose by 14.13%

High-Resolution Chart

BTC Futures (Long)

Bitcoin futures have spiked 116% in 6 days as traders have begun piling into leveraged long positions. While the situation remains precarious, large sums of funds are willing to bet. The jump more than doubled previous record levels on BTC longs since Bitfinex debuted the product in 2017.

High-resolution chart

Liquidations

Spot leveraged positions are getting absolutely rekt in the previous 24 hours with $1.12B in total liquidations. Markets become extremely volatile during crashes as liquidity begins to dry up. While the market frantically searches for buy/sell orders, leveraging positions is not recommended.

Source: CoinGlass

BTC Options

Put volume representing leveraged short positions on BTC skyrocketed for the June 23 expiration. Speculation drove put volume in the US$22000 through US$25500 strikes to spike over 1000%, as traders bet on short price continuation or to hedge spot positions. As a result, the put buyers are paying a ton of premium to add short exposure. But remember that the market tends to punish overly directional positions, putting aggressive relief rallies on the table.

Source: CoinOptionsStack

US markets closeGain
S&P 500-3.88%
Nasdaq-2.22%
Dow-5.16%
VIX+22.67%

Notable gainers/losers:

Protocol (Coin)Price ($)Gain (%)
Theta (THETA)1.14+3.4
Ethereum (ETH)1,186-19
Binane (BNB)221.25-14
Cardano (ADA)0.45-10
XRP (XRP)0.30-11
Solana (SOL)27.46-12
Polkadot (DOT)6.95-8
Dogecoin (DOGE)57.85-17
Bitcoin Fear and Greed Index8 Extreme Fear
“Crypto” Google Trends 90d30
“Bitcoin” Google Trends 90d19

Newswatch 📰

USDD stablecoin DePeg. Tron’s USDD stablecoin (which follows an algorithmic model similar to Terra’s UST) looks to be the latest crypto asset under the chopping block, with the peg reaching a low of US$0.91 on Sunday. Tron (TRX) founder Justin Son claimed TRX shorts on the Binance exchange reached 500%. Son vowed to fight the shorts by deploying $2b. USDD currently sits at a value of $0.99. Question is, for how long? 

Binance US is being sued over UST and LUNA. The US branch of the Binance exchange will be sued over unlawfully selling unregistered securities to US citizens by falsely mislabeling them as “fiat-backed.”

News Tidbits:

  • Crypto.com to cut 260 jobs (5% of workforce).

At the protocol level

MakerDAO is in great shape. The MakerDAO has sold off 65k ETH to pay off debt and decrease risk. While other stablecoin projects continue to struggle during the market selloff, MakerDAO highlights the sustainability of its protocol.

Protocol level tidbits:

  • Liquid staking Basic Visual Guide (educational).
  • Osmosis (OSMO) to restart the chain on Sunday at 16:00 UTC.

Banter’s take

The selloff is pushing crypto markets to extremes, and some atypical metrics are unfolding before our eyes. While we don’t recommend playing any of this action, eyeing the data never hurts.

According to metrics, it seems we’re reaching a convergence between large entities accumulating BTC and those being forced to sell, either to cover positions/losses or out of complete fear.

A few weeks ago, I mentioned the market likely required a “max pain”  moment before it could genuinely make a turnaround. Well, max pain has arrived with a vengeance. That said, with the FOMC set to meet tomorrow, there could be further downside still. 

For short-term traders, there’s tremendous risk on both sides of the table, and the price will get seriously choppy. Set your limits and stop losses and manage risk like a champ. If you’re a long-term holder, enjoy the crazy show. The market will test us these coming weeks and challenge our convictions. So, hang in there!

Thanks for reading,  

Gabri

Follow me on Twitter for daily updates!

Disclaimer

Good Morning crypto (issued by Crypto Banter) is a newsletter for entertainment purposes only.

All opinions expressed by the publisher, writers, and chartists should not be construed as financial advice and do not necessarily reflect the views of Crypto Banter. The publisher, writers, and chartists may hold positions in the tokens and assets discussed. Readers are encouraged to do their own research.

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