A MULTI-BILLION DOLLAR HEDGE FUND APPEARS TO BE NEXT ON THE CRYPTO HITLIST.
The Bear markets next target and much more.....
Good Morning Inspired Analyst Family!
Let’s start off with a quick look at the Market. The sale on Crypto continues…No one can pinpoint the bottom so I hope you all are being greedy with dollar-cost averaging!
3 ARROWS CAPITAL (A MULTI-BILLION DOLLAR HEDGE FUND) APPEARS TO BE NEXT ON THE CRYPTO HITLIST.
Rumors that they were about to go bankrupt began to circulate yesterday, and it now appears that there is some truth to them
3 Arrows Capital is a prominent token investor and a well-known brand in the ecosystem (very few hedge funds have more than 500k Twitter followers).
If it is confirmed that 3AC is insolvent, prices may fall even further.
3AC is one of the world's largest borrowers/clients. Their financial risk would be transferred to their lenders if they failed. Resulting in a larger sell-off.
What caused this to happen?
They've recently suffered significant losses.
Many of the tokens in their portfolio were the same as those in ours. They put $560 million into Luna, which is currently not even equivalent to a Pakistani mango.
They also have a significant staked eth position (that is not very liquid) and purchased $500 million in ETH at the peak of the market ($4.3k ETH).
COINBASE REDUCES ITS STAFF BY 18% AFTER OTHER BIG EXCHANGES ANNOUNCED STAFF REDUCTIONS.
Coinbase said yesterday that it will lay off 18% of its current personnel. They're not the only ones that feel this way. Gemini, BlockFi, and Crypto.com have all recently announced staff reductions.
Coinbase's CEO, Brian Armstrong, addressed a statement to the firm explaining the situation. They are as follows:
Economic conditions are rapidly shifting.
It's crucial to keep expenditures under control during a downturn.
Hired too quickly (4xd the size of the team in the last 18 months)
THE CELSIUS CRASH - HIGHLIGHTS
Celsius is a big exchange. Last year, the company had 1.7 million customers and about $20 billion in assets under control. Regrettably, they misused the funds.
Their strategy was to make a tempting offer ('deposit your crypto here and get 6% Plus interest!').
Take the money from the customers and invest it in Defi to receive a larger return. Keep the difference
However, their Defi investment was risky.
They had more than $500 million on Anchor (part of Luna), but they allegedly took it out before the collapse (in fact, may have triggered the collapse). They had a lot of ETH on Lido Finance and other sites.
They lost more than $100 million as a result of multiple hacks that occurred in defi.
To cut a long story short, they bet on client funds and lost. After that, as the market fell, many people sought to sell and withdraw... However, they did not have enough cash on hand to pay their consumers.
To avoid insolvency, they first came out with a thing called "hodl mode" to slow down withdrawals before completely suspending withdrawals over the weekend.
This is terrible news for clients who entrusted their money to Celsius. The money has not been lost (yet), but it has been locked away.
ANOTHER STEP ON THE WAY TO THE ETHEREUM MERGE
Ethereum has had a big week. Another test merge was conducted successfully by the developers.
This implies we're one step closer to the actual merge that everyone has been anticipating... Ethereum 2.0 will move away from proof-of-work and toward proof-of-stake.
The Merge is significant for several reasons:
It will allow for speedier transactions while using less energy.
Miners should exert less selling pressure! Currently, miners must use the money they make to pay actual bills (costs money to run their mining computers). Every day, that's nearly $10 million in sell pressure. No mining = less daily sell pressure = price rises?
A significant step toward future scalability
Lots of traders who borrowed money to buy crypto are being margin called
People become greedy during bull markets and borrow money to invest more.
This can range from a single trader taking out margin on an exchange to MicroStrategy financing hundreds of millions of dollars to buy bitcoin through a bond sale.
They owe money and must have underlying collateral to repay it.
However, if the underlying collateral prices fall by 60% to 80%, you risk being "liquidated" (they take your collateral because your loan is underwater).
This is what drives prices down. Liquidations are forced asset sales. The forced selling lowers prices even further, resulting in even more liquidations. And so on until all the leverage has been removed from the system.
MEME OF THE WEEK
Ending the newsletter on a lighter note 😊
Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.