From Bad to Worse
Crypto winter is here.
My short-term forecast of one Bitcoin (BTC) priced at $20,000 is coming to fruition as BTC undergoes a nasty selloff that was triggered by panic liquidating.
The price was around $28,000 per BTC this weekend, only for the digital gold to sink to around $23,000 on Monday morning.
The dip that was around 17% won’t attract any dip buyers right now because as a whole, the entire industry is a no-fly zone.
A store of value during high inflation?
It’s playing out unfavorably for BTC as consumers and investors trade with their feet by preferring a can of tuna over an unregulated controversy.
What really heaved fuel on the fire?
Another systemic risk flaming out of control.
Celsius, said Monday it was pausing all withdrawals, causing more pain in the fragile crypto market.
This could be crypto’s “Lehman moment.”
Freezing payment flows is the antithesis of a store of value which BTC and crypto experts claimed it was.
These events will stain the infrastructure of cryptocurrencies for quite a while until they can prove they aren’t such a half-baked operation.
Celsius mainly delt in lending crypto funds and just imagine the trajectory of the stock market if all banks froze withdrawals.
The stock market would open down 25% the next day.
We are having one of those moments in the crypto industry with no sight of help to save us.
Celsius is one of the largest participants in the burgeoning crypto lending space, with more than $8 billion lent out to clients and almost $12 billion in assets under management as of May.
Celsius, which offers users higher-than-average interest rates on their deposits, is essentially the crypto equivalent of a bank — but without the strict insurance requirements faced by traditional lenders.
It was just a few weeks ago when Celsius CEO Alex Mashinsky downplayed the company was having any trouble meeting withdrawal requests.
Either he was lying or the situation went from great to abysmal quickly.
I believe it was a combination of the two.
No later after Celsius froze funds, pandemonium came to the biggest crypto exchange Binance.
Binance said Monday that it is temporarily pausing bitcoin withdrawals “due to a stuck transaction causing a backlog.”
Crypto exchanges are brokers precisely, so trades don’t get “stuck.”
At first, Binance founder and CEO Changpeng Zhao said in a tweet that the issue would be fixed within 30 minutes. But he later amended that to say, “Likely this is going to take a bit longer to fix than my initial estimate.”
Crypto is going haywire and investors are pulling funds in droves, but the inferior infrastructure is overloaded by the withdrawal transaction volume.
Investors should stay away from crypto right now unless they desire to sell a rally through a Bitcoin proxy on the public markets.
Illiquid markets mean that slippage costs are high and trades might not get filled at all.
If an investor can’t pocket the proceeds, then all bets are off.
Investors might be waiting days if not weeks to receive their order.
The market mayhem has shown crypto to be an absolute inferior asset to that of any alternative.
Investors just assume tomorrow will be worse than today.
A massive loss of confidence is the last thing investors want to see happen to an unproven industry.
Lastly, this guarantees the pulling forward of heavy regulation from the Feds that will absolutely result in higher costs for not only the trader but every part of the crypto ecosystem.
Crypto has shown it isn’t able to self-govern and with that, a third-party organization will need to come in and determine the law of the land.
The price of Bitcoin will sink through $20,000 and I believe the next stop is $10,000.
Tighten your seat belts folks.
