As of this morning, the bitcoin price tumbled to $18,000 trades below the previous cycle’s all-time high for the first time in history. We have never seen this before with bitcoin, because usually after each bitcoin has happened every four years, supply is cut in half, there’s a new bull run, leading to a new all-time high. Although we may retest the old all-time high in this case, that was $20k back in 2017 and we have never dropped below.
If you hold bitcoin, I want to talk about why we have an update on Three Arrows Capital and their potential insolvency. They will say that Caesar is about to go bankrupt. What other companies are now being affected by this collapse and much more?
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Three Arrows Capital Actively SELLING (Confirms Heavy Losses)
Let’s jump in, starting with Bitcoin and Ethereum. As ethereum drops below $1,500, bitcoin plunges below $20,000 as ethereum drops below $1,000. This is happening for two big reasons: the continuing plunge in traditional financial markets, we know this, and panic about crypto lending platforms like Celsius hedge funds, we know this, sent bitcoin into the teens for the first time in more than 18 months.
Let’s start with Three Arrows Capital. Just as a reminder, Three Arrows is one of the blue-chip hedge funds in this space that is heavily respected and they had, this says 18, but I believe they had three billion dollars in crypto assets under management. And now they’re liquidating heavily.
We can look at some of the on-chain activity for three hours of capital and see they are depositing funds onto all these exchanges to sell to try and cover their debts.
As of yesterday, the founders of 3AC have given their first public interview. Three Arrows Capital confirms heavy losses from the collapse of Luna’s business and is exploring potential options. So the company’s co-founders said that they’re looking into the possibility of asset sales and a rescue by another firm. By the way, this is being reported as this interview was directly from the Wall Street Journal’s. Beleaguered cryptocurrency fund 3AC confirmed Friday it had suffered heavy losses in the recent market downturn. Instead, it had hired legal and financial advisors to figure out a way out. “We are committed to working things out and finding an equitable solution for all our constituents.” The fund has over three billion dollars worth of crypto assets and had that much worth of crypto under management back in April.
Of course, they now have a lot of debt. 3AC is exploring options, including asset sales and a rescue by another firm, in hopes of reaching a settlement with creditors. For example, 3AC owes at least 6 million to crypto exchange BitMEX. We will talk about BitMEX and other companies in a second, but how this cascading effect of companies collapsing started in the first place was all because of Luna.
Davies, a co-founder said 3AC invested over 200 million dollars in Luna tokens as part of a 1 billion dollar raise by LFG back in February, an amount that is now essentially worthless since the Terra ecosystem imploded in mid-May. ‘The Terra Luna situation caught us very much off guard’ he said.
To cover their losses and prevent more liquidations if they can, they are selling. 3AC was additionally known as one of the largest holders of grayscale bitcoin trust GBTC as well as stETH tokens. That’s a one-to-one backing, so basically Ethereum. Both of which have seen steep declines recently.
So how does this affect you and me as crypto holders? Plain and simple, we have to hold on through this suppression. It is not a natural sell-off, at least not all of it. It is because of this black swan-like event that crypto companies are nearing insolvency. They’re forced to sell.
Other Crypto Companies ALSO in Danger
Next up before we get to Celsius, what other auxiliary companies are now being affected by this? BitMEX and other exciting Three Arrows Capital amid 3AC insolvency fears. As Three Arrows Capital struggles, its lenders have started liquidating the firm’s positions and portfolio companies are distancing themselves. The ripple effect continues.
On Tuesday, it emerged that all 3ACs had begun selling off assets, including 40 million dollars’ worth of their Lido stETH. They sold that Ether. It’s also widely believed, although still unconfirmed, that 3AC has been trying to keep a $264 million Aave loan as well as a 35 million dollar compound loan from going into liquidation.
Of course, companies are affected. BitMEX on Friday confirmed that they have liquidated Three Arrows Capital positions this week as well as the users of Finblox affected as well as staking platform Finblox, which counts 3AC as an investor, has reduced customer withdrawal limits. So even though, these customers did nothing wrong. Three Arrows Capital was just an investor in Finblox. These customers are having trouble accessing their own money. Users are allowed to withdraw up to $500 of their assets per day with a monthly cap of just $1500 of their own assets.
I just bought some bitcoin at around $20k a few days ago, and if we keep dipping, I will keep buying. That’s my toxic trait just because I’m a long-term believer. I still tend to believe that bitcoin dominance is going to at least 50, probably even 55, so I’ve not touched the alt coins yet, but I do think it is a great time to start dca-ing into bitcoin for me at least.
WTF IS HAPPENING W/ CELSIUS?!
Next up, what about Celsius? Are they going bankrupt? Will they get bought out by Nexo? Well, we’re still waiting on one. There has not been a new update in the last two days. The minute I do get one, I know Celsius affects millions of users. I thought the clip of Mashinsky Celsius, CEO Peter Schiff was very interesting. Schiff was savaged by Mashinsky back in November 2021. This is about a 90-second clip, and you have to give Peter credit for being completely correct. Take note of this:
Bitcoin pays dividends. How does Peter Bitcoin pay dividends? How does bitcoin give us because we earn a yield?
How do you earn a yield on bitcoin? What do you do to generate income on that bill?
I’m happy to spend an hour with you.
Yeah, you’re trading it. You’ve got to be taking a tremendous amount of risk. But while bitcoin itself doesn’t generate any yield.
It does just like any other asset can generate yield.
What earnings does bitcoin generate?
At current yields, gold generates 5.5 percent.
What are you doing to generate that buzz that you’ve got? You must be taking tremendous risk to generate those returns. Of course, you are.
I’m not giving financial advice; I’m just explaining how interest rates work. It’s an amazing opportunity for people to unbank themselves. Take advantage of this.
You know, who also had an amazing opportunity. Bernie.
Okay, so take a look and see what happened…
[This article is a transcription of a video made by Altcoin Daily]
Original video: https://youtu.be/8j8c427GUCM ]