The correlation between the US stock market and bitcoin’s has once again become apparent in the past seven days, so it is practically the S&P 500 that is best analyzed to fully understand and predict BTC’s behavior.
As can be seen, after hitting a low for the year, the stock index has recovered, with bitcoin following in recent days. However, we remain in a clear bear market with the price strongly rejecting the 30-day moving average yesterday. Bitcoin reacted the same way and immediately lost all of its gains for the week. Ultimately, we are at the same point as last week, with bitcoin competing for the all-important $20,000 area.
The S&P 500 index and the rejection of the 30-day moving average yesterday.
Rising inflation worldwide remains the main source of concern in the markets. Spain just announced a record 37-year increase with a 10% year-on-year increase. Wells Fargo said in a note Tuesday that a drop in stock prices will likely “take time to recover.” In the United States, the S&P 500 has fallen more than 20% since its peak in December 2021, sending it into a technical bear market. “Right now, we prefer patience before putting new money into stocks,” the Wells team writes. “As the Federal Reserve has just entered its tightening cycle, we have shifted our investment preferences from economically sensitive assets to more quality-oriented and more defensive assets.”
The hedge fund Three arrows capital, based in Singapore, was founded ten years ago. Until recently, the latter was estimated to have about $10 billion under management. However, the echoes of massive losses in the context of the TERRA and LUNA saga have not stopped multiplying in recent weeks. On Monday, the cryptocurrency broker digital travel, he, who reportedly borrowed 3AC $350 million in USDC stablecoin and 15,250 bitcoins – for a total of more than $673 million at current prices – demanded a full refund. This request was not granted, leading to fears that the fund is now insolvent.
The ax has officially fallen today. Indeed, according to information collected by air newsA court in the British Virgin Islands ordered the company’s liquidation Three arrows capital† Liquidation refers to the formal closing of a company due to the inability to repay its debts and other financial obligations. The company’s assets are then in the hands of various creditors with outstanding loans. It is not yet clear from which companies their claims will be paid and when. The numerous margin calls on the fund’s positions have certainly contributed to the downward pressure seen in recent weeks. Is the damage done completely or are there still many positions to liquidate? History doesn’t say it yet.
It’s when the tide goes out that we see who’s swimming naked. We learned on Tuesday that an account on CoinFLEX – owned by a “person of high integrity and considerable resources” – suffered a loss of $47 million after being allowed to reach negative equity without being liquidated. The platform – another – now appears insolvent and has halted withdrawals, at least temporarily. It soon became clear that this person is Roger Ver, the one who was once called the Jesus of bitcoin. Ver said via Twitter that he “had not defaulted on any debt to a counterparty”, claiming it was the company that “owed him a substantial amount”. CoinFLEX CEO Mark Lamb replied that the company had a written contract with Ver “in which he committed himself to personally guarantee negative equity in his CoinFLEX account and to replenish his margin regularly. […] It is unfortunate that Roger Ver has to resort to such tactics to evade his responsibilities and obligations.”
It is probably the investors who will eventually be cheated in the story. The platform plans to address the lack of liquidity by issuing a new token, Recovery value USD (rvUSD), with the aim of allowing withdrawals again tomorrow. One can strongly doubt the success of the strategy. In return, Bitcoin Cash, the forked of bitcoin led by Ver in 2017, today reaches a floor ratio with BTC. The project seems practically dead. Ver’s decisions are sure to go down in history, for all the wrong reasons. To say that the latter is one of the longest standing investors in bitcoin. It would have been so easy to just enjoy its ensuing riches!
Are G7 countries unknowingly defending bitcoin in their decisions this week? Certainly, gold’s flaws are becoming more apparent than ever after another move to ban Russian gold imports. According to Bitcoin supporter and investor Anthony Pompliano, the move to block Russian gold exports is simply another step in the ongoing “weaponization of currencies”. “This is another important step in the decades-old trend of attempted currency weaponization by developed countries, leading to a deterioration in confidence in those same currencies,” Pompliano wrote in Monday’s newsletter. It is believed that this G7 decision could make buying physical gold in Western markets more difficult, leading to price differentials between paper gold and physical gold. “Even a bitcoin [maximaliste] as I can see this potential shock to the gold markets, and I can’t resist the urge to join the wave. I’ve kept some physical gold coins, hoping to sell them for bitcoins when the panic hits,” said Cash App engineer Danny Diekroeger.
Securities and Exchange Commission (SEC) chairman Gary Gensler on Monday confirmed the SEC’s view that bitcoin is a commodity, but declined to extend that label to other cryptocurrencies. The regulatory framework surrounding cryptocurrencies and digital assets is centered around interpreting which act as securities, such as stocks, and which act as commodities, such as gold. The previous SEC administration considered both Bitcoin and Ethereum commodities, but Gensler only mentioned Bitcoin in his final comments and previously avoided answering specific questions about Ethereum.
While decentralized cryptocurrencies are struggling in the markets, that is not slowing down plans for a central bank digital currency in the United States. US Federal Reserve Chairman Jerome Powell said Congress will eventually get advice from the Fed on how it might implement a central bank digital currency (CBDC). In a speech to the House Financial Services Committee, Powell said: “I think this is something that we as a country should really look into”, adding that the prospect of issuing a CBDC “should not be a partisan issue”. “We’re doing a tremendous amount of work,” he said, noting that once the guidelines are finalized, it will be up to Congress to draft legislation authorizing their implementation into the US financial system.
It is when the clouds are dark that the period of maximum opportunity often occurs. It is a pity that the latter only became clear afterwards! As analyst Will Clemente puts it, “Bitcoin is incredibly cheap right now. It has traded this far below its 200-day trend and total cost base for only 3% of its existence.
Additional data from Glassnode shows that bitcoin’s 200-week moving average, equilibrium price and delta price in its bear market bottom pattern match the Mayer multiple statistic mentioned by Clemente.
This article is brought to you by Fonds Rivemont. The Rivemont crypto fund is the first and only actively managed cryptocurrency fund in Canada. RRSP and TFSA are eligible. Accredited investors can learn more here†
Disclaimer: This column does not necessarily reflect the views of CryptonewsFR and does not constitute investment advice or instructions to trade.†
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