🍻 What Happened This Week in Crypto? Emiri Checkin’ in From the Pub
HOW THE HELL DOES IT KEEP GETTING WORSE?
BTC has just broken a 3-month long range to the downside. Forget about the castles in Florence, the negronis on the beach at Bali, or the yachts in Monaco. It was all a dream. We were never gonna make it.
Alas, as the crypto market keeps doing crypto things (i.e. making us poorer), the blocmates crew must keep pushing.
This week was pretty eventful, to say the least. Surprisingly, a lot of action was on the Bitcoin front with governments and Mt.Gox stuff, some news with the SEC trying to secure any win they can in crypto, and lastly, some neutral updates from the Ethereum front.
Let’s dive in!
Oh, and before I forget, Cheers 🍻
📉 Germany and Mt.Gox liquidate the gang
Over $650M liquidated in the past 24 hours. Just another day in the office, I guess.
But in all seriousness, this liquidation was pretty close to the FTX liquidation, which is a big deal.
The headlines are littered with two culprits. Mt.Gox and the German government.
Mt.Gox for those who don’t know was a crypto exchange that went bankrupt in 2015 and users ended up losing all their BTC. After almost 9 years, the creditors are getting their money back. This is close to $3B in BTC hitting the market.
The Mt.Gox wallet has been moving Bitcoin constantly, and recently, a portion of it, around 1.5K BTC, was transferred to BitBank.
The assumption here is that sellers are frontrunning the imminent dump of BTC from the Mt.Gox creditors once they get back their BTC.
Then comes the German government. Their wallet currently has $2.3B BTC which they seized many years back. This $2.3B is after sending close to $200M in BTC to exchanges and selling.
Now, this may sound like a lot, but $200M is not a lot for the BTC market in the grand scheme of things. Even $3B is something that can be absorbed by the market or OTC with relative ease.
Shout to our GOAT Justin.
The reality of the situation is that these are just convenient headlines that fit the price action and, hence, work as a narrative. In reality, spot buying demand dwindled.
The BTC ETF basis trade was the largest driver of spot demand from institutions, and now that the basis trade is closed (i.e. no longer profitable), demand has stagnated.
To accompany this horrible price action is miner capitulation. The Bitcoin difficulty increased this past week, making it more expensive to mine BTC. With prices going down, miners' profitability decreases, which means they eventually have to capitulate and sell their reserves or stop operations.
The good thing is that this is typically a bottom signal, so let’s hope it's true again.
🤡 Gensler is back
As if the markets weren’t bad enough, this guy has decided to make a comeback.
After having his ass handed to him by literally every crypto company he tried to sue, he has now decided to go after other targets.
The story starts with Coinbase.
Out of all the crypto companies, Coinbase was the only one willing to play ball with the government and do everything by the book since its inception. What’d they get in return? A nice slap in the face. Just persistent scrutiny from the SEC for no valid reason.
Recently, after all the L’s the SEC took, Coinbase flipped the switch and decided to sue them.
Pretty soon after, the SEC retaliated in the most SEC way possible and went after crypto protocols this time.
To begin with, they sued Consensys, the creators of Metamask, over their Metamask staking operation. They claimed that the Metamask swap and Metamask staking operation violated federal laws. Of course, they will eventually lose this as well.
Then, they went on to sue liquid staking protocols Lido and RocketPool.
The premise is the same. They believe stETH and rETH are securities, just like they believe everything is a security. I’m sure if you get a ladyboy in Bangkok, Gensler will sue you and tell you that you are illegally interacting with a security.
🔷 What’s happening in ETH land
Let’s start with the bad news first.
It was reported that an Ethereum ICO whale moved $24M worth of ETH to Kraken. While $24M is not the end of the world, it’s the sentiment of an OG wallet that held for so long, selling now, that causes concern.
On the other hand, we have a new protocol that Vitalik likes. MegaETH.
MegaETH is a new EVM-compatible chain that claims it can do 100k TPS, dubbing itself as the real-time blockchain. That means the second a transaction is placed it is executed instantly. MegaETH has received $20M in funding from the likes of Vitalik, Joseph Lubin, and Dragonfly Capital.
That’s a pretty impressive list of backers. Worth keeping an eye on for sure.
🫠 ICYMI.
Find everything at blocmates.com!
🤙 What to look forward to
While it’s easy to throw in the towel and say the market is cooked and don’t do anything, I think the opposite.
Here’s what I’m keeping an eye on.
With ETH, I believe the longer it is under $3K, the bigger the blessing it is. I will be adding at $2.8K and $2.6K as key areas of support. But if it goes lower, I will keep bidding at the next support levels.
To go with this is ENS. I know ENS as a token is useless per se, but something is cooking on that chart and I don’t know how else to explain it. I’d say nibble at key support levels on spot. Stay away from leverage until the market is more obvious.
The last thing to keep an eye on is FTM. The sonic upgrade is coming soon and Andre has an uncanny ability to cook up a storm when people least expect it. I’d bid some FTM and be ready.
Alright, that’s all from me. I’ve had a rough week, and these pints aren’t going to drink themselves. I’ll catch yall two weeks from now. PEACE.