WEEKLY UPDATE - 24 JUNE 2022
What Happened In Crypto This Week
Dear Moon Birdies,
During a week where everyone is looking at the charts for a signal that we’ve reached the bottom, BTC price moved by a net total of 1%. But don’t be fooled by the lack of price activity, there’s so much going on right now. While the macros remain negative and bad actors are getting liquidated left and right, global adoption of crypto endures. In this week’s recap, we’ll discuss all these and more.
The chart above represents Bitcoin price action from last Friday to today. BTC moved from around $21,055 and it’s now hovering close to the $20,900 range. That’s not a lot of change, but the real story is between the lines. That dip you see happened during the weekend and Bitcoin dropped to as low as $17,700. While savvy investors bought for cheap, the overwhelming sentiment was to sell because “BTC is going to zero.“ Two days later, price crossed back over $20K, and the tone changed to “Oh snap, $17K was the bottom and I missed it.”
This happens in every bear market – people panic and sell when price is low (when they should be buying) and spend the next few months trying to predict the bottom. It never works; charts are great, but they never tell the full story. The people who make real money are the ones that buy when everyone is scared and are selling; they’re the ones who get the huge ROIs and generational wealth everyone loves to read about. But if we’re being honest, how you behave during down days is a direct reflection of how much you believe in Bitcoin’s future prospects.
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The Big News
Crypto punishes bad actors decisively
When Luna/Terra fell last month, crypto market observers said the domino effect of the crash would be felt across the ecosystem, and they were right on the money. Since May, several lending platforms, hedge funds, and centralized finance (CeFi) companies have either been liquidated or are on the verge of bankruptcy. Even big names like Celsius, Three Arrows Capital (3AC), and Voyager Digital were caught in the storm.
We found some common themes among all affected parties: the excessive use of leverage, placing clients’ funds as collateral for huge loans, and over-exposure in search for profits. These practices are quite common in traditional finance (TradFi), and with recent happenings, they seem to be creeping into the crypto space as well. But unlike TradFi, crypto punishes swiftly and decisively. If you take on too much leverage, the market will penalize you for it, as 3AC and Celsius understand right now.
There have been talks of a bailout that prevents retailers from losing their investment, and that’s a welcome development. But these projects have lost the trust of the public and it’s something they may never regain – just ask Luna how the ”rebirth” is shaping up. The crypto market knows how to clean up its mess, and in the coming weeks, we may yet see more bad actors getting de-leveraged. The entire market suffers as a result, but it’s the price we have to pay for a future without careless companies putting investor funds at risk.
The ongoing cleanse further reinforces the need to manage risk optimally and retain control of (if not all, then most of) your crypto assets. It also emphasizes our message of looking beyond the charts and technical analysis for now. With all these liquidations happening so close to one another, technical indicators may not provide an accurate or reliable overview.
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Fellow Moon Birdies..
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