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It’s peak fear time for investors, and it could get worse (before it gets better!).
Crypto markets in major turmoil

Crypto markets in major turmoil

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Crypto markets in major turmoil

Overview

  • Inflation triggers market-wide selloff.
  • Ethereum plummets.
  • Celsius drama.
  • Coinbase employee revolt.
  • Yuga Labs foils attack plot.

What brought you to crypto? 

Dear Banter Fam, 

Although the Good Morning Crypto newsletter typically covers TVL metrics on Mondays, we felt the need to provide a few words of encouragement during these deteriorating market conditions

Yep, it’s awful out there. 

So, what happened this weekend?

Well, it begins with inflation. 

Friday’s high CPI print of 8.6% proves that the Fed has lost complete control of the situation (or possessed little influence from the start). Now, it has to act. Jerome Powell could come out all guns blazing at the next FOMC meeting. Which is… gulp… this week. 

With rates expected to rise by 50bps, some are predicting that the Fed may take an even more aggressive stance, igniting concerns of a recession. 

In a nutshell, it’s bleak, and things will probably have to get worse before they get better. 

A few words of encouragement…

When times are tough, it’s good to remind ourselves why we joined crypto in the first place. 

There are three types of people that crypto attracts:

  1. The profit-seeking “tourist”. 
  2. The people who believe crypto will improve the future (and perhaps their personal finances). 
  3. Three, the developers, industry workers, and creators. 

Individuals can fall under more than one category. 

Those that came ONLY for gains are mostly long gone, but they’ll be back when times are good. To be part of the other groups takes knowledge, work, and conviction. All the homework you’ve done in the past highlights why you are still here, and conviction is the binding mechanism that keeps you around. While the crypto industry grows, so will you. 

So, what brought you to crypto? 

Market update 🌍

While the market struggles to digest newly-released, higher-than-expected inflation numbers, Bitcoin (BTC) and the broader crypto markets continue to crash along with equities. BTC failed to hold a vital US$30k support zone over the weekend, affirming the possibility of a fall to 2017 highs of US$20k. With eleven straight weeks of pretty much constant downward price action (excluding one, barely green candle), BTC shows little sign of slowing. BTC completed the week down -11.18% to US$26,543. 

High-resolution chart. 

Selling pressure hit Ethereum (ETH) extra hard after devs discovered a few minor bugs during the Ropsten testnet merge. Additionally, the developers announced a two-month delay of the chain’s difficulty bomb that will force miners off the network in prep for its Proof-of-Stake (PoS) merge. The third, and possibly most problematic issue, comes after the “depeg” of stETH and ETH. 

As Celsius faced intense liquidity issues, it began to sell off its stETH position to cover the cost of customers withdrawing ETH from its platform. The Celsius incident and wider market volatility forced the stETH peg to 0.95 ETH. ETH prices reacted by falling -20.40% this week, hitting highs from the 2017 blow-off top. ETH completed the week at US$1413. 

High-resolution chart. 

Friday’s close: 

US markets closeGain
S&P 500-2.91%
Nasdaq-1.68%
Dow-6.06%
VIX+6.37%

Notable losers (7d): 

Protocol (Coin)Price ($)Loss (%)
XRP (XRP)0.34-12
Cardano (ADA)0.449-13
Solana (SOL)30.83-20
Dogecoin (DOGE)0.06-21
Polkadot (DOT)7.43-20
Tron (TRX)0.07-6
Shiba Inu (SHIB)12.38-19
Avalanche (AVAX)17.24-28
Bitcoin Fear and Greed Index11 Extreme Fear
“Crypto” Google Trends 90d19
“Bitcoin” Google Trends 90d29

Newswatch 📰

Celsius suspends withdrawals. Uh oh. Yep, Celsius customers received an email yesterday outlining the company’s temporary suspension of swap and withdrawal features amidst market-wide volatility. The CEL chart is a horror show. This is a huge story yet to play out, but there’s no doubt about it: it’s a significant blow to crypto, and if the situation gets worse… well, it could trigger a contagion. It’s big stuff, and obviously we’ll be covering it here, and during the shows, as the situation unfolds. 

Coinbase employee revolt. Coinbase team members called for the removal of several executives from the company in a public post last Thursday, citing claims of mismanagement, toxic workplace culture, and a hiring freeze that doesn’t support company growth. CEO Brain Armstrong denounced the approach in a Tweet, calling it “dumb on multiple levels” and a “non-event.” The Coinbase stock (COIN) fell -7.86% after the incident went public. 

Some good news: 85% of merchants eye up crypto payments. A recent report by financial services company Deloitte discovers merchants are investing millions in enabling crypto payments. In addition, more than 85% see integrating crypto payments as a high priority. 

News tidbits:

At the protocol level

MetaMask integrates Near. Near Protocol (NEAR) becomes the first non-EVM compatible chain to integrate MetaMask. 

Protocol level tidbits:

  • Understanding staked ETH (stETH) on Lido (LDO)
  • Elrond (EGLD) incident and recovery report.
  • Staked stETH and AAVE (AAVE) risk
  • JPEG’d (JPEG) has to be one of the most undervalued plays in crypto. 

NFT & metaverse update 🐵

Seth Green retrieves stolen Bored Ape. Actor/director Seth Green pays 165 ETH to recover the Bored Ape that attackers recently hacked from his wallet. Green has been producing a show revolving around the NFT. 

Yuga labs co-founder discovers attack plot. Yuga Labs co-founder Gordon Goner has allegedly received insider information around a possible attack plot on the BAYC community. According to Goner, the plot involves a hacked Twitter account that hackers would use to reveal a private mint for the community, who replied, ” There are no surprise mints. Ever.”  

Banter’s take

It all happened so quickly… from the Summer 2021 euphoria, to the November highs, to the red candle desert we’re experiencing now. During that time, almost everyone we know in crypto wished they had taken more profits at the top. It can be a yo-yo of feelings. 

In the end, it’s not about how you feel, though. It’s about what you believe. If convictions change based-off emotions, they likely weren’t strong convictions from the start. Knowledge is the path to building a thesis. 

So, while the market is down, build up knowledge, read whitepapers, learn tokenomics, stay up to speed with macro events, and continually add tools to your belt. 

This market moves in cycles. True wealth is created in bear markets. And when things flip bullish, being well prepared could be one of the most pivotal decisions you’ll ever make. 

Thanks for reading, fam. 

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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