Welcome to the Three Ts with CoinJar. Every two weeks we cover a big topic, an interesting trade and some good old-fashioned technical analysis (courtesy of ThinkMarkets Australia’s Carl Capolingua).
time to lie down
I mean far out there. What are you even saying at this point? The financial world is having the collective equivalent of a grand mal seizure and crypto, patron saint of easy money, is leading the charge into the abyss.
Ethereum is trading 20% below its 2017 bull run high. Bitcoin is flirting with its all-time high from the same period. Michael Saylor is currently sitting on a loss of more than $1 billion.
The massive dual leadership numbers around 13,000 https://t.co/lxOXTPTxkg pic.twitter.com/C9k8F0PqK4
— Peter Brandt (@PeterLBrandt) June 14, 2022
Most altcoins are already 90% down and damn it, another 90% doesn’t seem out of the question. If this is in any way reminiscent of the dot-com crash, we can expect many cryptos to simply go to zero.
However, Crypto’s problems are compounded GFC-style by the market’s addiction to leverage. (In this analogy, the LUNA-UST collapse was Bear Stearns’ starting gun for the crypto industry’s big reckoning.)
Crypto fluctuates between 2 market conditions:
1) It’s so easy to make money, all you need is a pulse and an arm to click the green button
2) so hard to survive that even if you avoid projects that turn out to be scams, they still cause market-wide nuclear weapons
Unfortunately we are stuck in #2 rn
— Luke Martin (@VentureCoinist) June 14, 2022
Yield farming firm Celsius, which recently boasted more than $20 billion in assets under management, has suspended withdrawals as it tries to avoid liquidating its clients’ assets. Tron’s algorithmic stablecoin has lost its peg. A stETH no longer buys 1 ETH.
Unsustainable DeFi yields are the new subprime mortgages. Leverage isn’t causing the downturn, but it’s making it worse – and nothing good is likely to happen until much more is flushed out of the system. Which, to be clear, will be positive for crypto in the long run.
But on the plus side, every day of blood brings us one step closer to the end of the pain. Right?
#BTC $SPX
If only I would stray from #Twitter vibes
(That’s what I called the Covid bottom in Stocks/#BTC to the day while EVERYONE called for a 2nd Great Depression)
I’d say we’re BOTTOM this week
I don’t care about bottom calls, but I’m sure the MAJORITY will get that wrong
— Mr. Anderson (@TrueCrypto28) June 13, 2022
Canary in the coal mine
Unlike previous crypto meltdowns, the only salvation this time is that we share the pain with the bastions of traditional finance.
A few months ago, BitMEX founder Arthur Hayes argued that Bitcoin is the last free market in the world, the only market not distorted by tariffs, subsidies, and other government measures that slow the transfer of value.
The implication is that Bitcoin acts as a leading indicator of what’s happening more broadly elsewhere. Figure 1: Bitcoin began its descent in November of last year, two months before the stock market also realized that gravity is “a thing.”
Since then, the correlation between Bitcoin and the stock market has been at all-time highs. So you want to know when things could be getting better across the board? Look for the bitcoin bid. It could show that money is finally ready to gamble again.
Arthur looks for three data points to find the bottom:
1. Decorrelation between BTC and Nasdaq
2. Current price compared to previous ATH
3. Mainstream News Sentiment
Two out of three are easy to quantify; If you have a measure of mood, then you could…
1/ https://t.co/c7VPkc3FT7
— Lionel Lightcycle (@0xLightcycle) June 2, 2022
Protect your eyes, children
And now for some *shudder* charts. This week we have ThinkMarkets Australia Markets Analyst Carl Capolingua dishing out the good stuff.
First of all, bitcoin. Having broken the support at $25.3k, this is now becoming the ceiling that needs to be broken before any medium-term relief can be found. However, the candles suggest that we are in the midst of a full blown capitulation and should look to the 2017 high of $19.8k or, if that fails, the 2019 high of $13.8k.
Image courtesy of ThinkMarkets
Ethereum is looking even worse, according to Capolingua. Having broken the 2017 bull market high of $1460 and the February 2021 low of $1290, the capitulation is well under way – but it looks like there may be plenty of gas in the tank.
$1040 could provide some demand, although $900 seems a more likely near-term target. If you break above $1700 again, we can talk about a return to bullish conditions.
Image courtesy of ThinkMarkets
CoinJar is Australia’s longest running crypto exchange. Since 2013, CoinJar has helped more than half a million Australians buy and sell billions of dollars in cryptocurrency.
ThinkMarkets is a premier multi-asset online brokerage offering quick and easy access to a wide range of markets including forex, CFDs on stocks, cryptocurrencies, commodities, indices, futures and more.
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