Bitget Weekly Newsletter (June 13 - June 19)

Bitget Weekly Newsletter (June 13 - June 19)

As your most credible source of crypto news and knowledge, Bitget Academy is proud to release our Weekly Newsletter Series, the 360-degree onboarding guide for all crypto enthusiasts.

BGB Beating BTC and ETH

There was a bloodbath, we are not gonna lie. But BGB (Bitget Token) managed to get out of the chaos and outperformed the prominent BTC and ETH. Comparing these figures at the beginning of the week, BGB cumulative return was still slightly better. Last week didn’t look too shabby for BGB holders.

Everything Bitcoin

Why not start our first-ever issue with the flagship coin of crypto? Bitcoin lovers have had an excruciating week, with BTC price slipping below the iconic 2017’s high at $19,776. That also means Bitcoin failed to claim the steady $20,000 support level of last week and has consequently provoked alarm among traders. Crypto's total market cap breached $1 trillion for the first time in 18 months.

The largest institutional Bitcoin investment vehicle, Grayscale Bitcoin Trust (GBTC), took a direct hit from Bitcoin price dip: GBTC Premium sank to its all-time low at -34% as of June 17. For those who are not familiar with the term, the GBTC Premium represents the difference between the actual share price of the trust and the spot price of its Bitcoin holdings.

Source: Skew Analytics

The lower the figure is, the more bearish institutional sentiment might be, as explained by analyst Dylan LeClair. It is understandable, though, because Bitcoin investors have seen the worst week in terms of returns, with the net realised losses captured at $4.23 billion.

Source: Glassnode

Another factor that might contribute to the falling price of Bitcoin is a record release of 88,000 Bitcoin into circulation:

Source: CoinMetrics.io

However, things aren’t necessarily as bad as we think. Last week’s Bitcoin price volatility doesn’t change the fact that the average bid-ask spread of BTCUSD pairs on several exchanges in the first five months of 2022 has significantly declined compared to the same period last year. A narrow bid-ask spread should typically indicate better liquidity as well as high demand for the asset, in this case Bitcoin.

Source: Kaiko Analytics

Bitcoin’s improved liquidity was also demonstrated by the aggregated daily spot volume with the 13-month high recorded last Monday.

Source: Skew Analytics

On June 17, the number of bullish margin positions on Bitfinex jumped to 109,765 BTC - way higher than the short exposure indicator. A new high was also achieved on Monday the 13th of June, meaning overall market sentiment on Bitcoin remained rather bullish.

Source: BitcoinWisdom.io

Bitcoin’s high volume and value decline might as well be a consequence of big players’ troubles. We’ll discuss the topic more right below, but the idea here is some large holders were forced to sell their Bitcoin to cover the bad debts, making the sell-off look panic and liquidity-driven. The silver lining here is Bitcoin dominance has been testing the 47% resistance level; if it fails, there is a good chance that we are gonna have a small altcoin seacon, just like the ones in August and September 2021.

Source: TradingView

Turbulences In The Stablecoin Market

Stablecoins continued their downward spiral. Data from Galaxy Digital and CoinMetrics demonstrated a slump of $13 billion in stablecoin supply, whereby DAI alone accounted for $3 billion and the remaining $10 billion was retired from major issuers (Tether, Circle, etc.).

The week also marked the new all-time high - though it wasn’t the most anticipated record - in USDC’s historical daily price volatility at 0.05 on June 15.

Source: The Block

Despite its somewhat erratic movements, USDC has successfully risen in popularity, claiming the never previously achieved peak of 30.24% in total stablecoin supply. Earlier in the week, Circle also announced their new stablecoin issuance scheme for late June 2022. The new stablecoin is 100% reserved and pegged to Euro at 1:1 ratio. Upon official launch, Circle’s Euro-denominated stablecoin is available for institutional investors only.

Meanwhile, USDT issuer had to face mounting concern regarding the composition of its reserves, especially when it comes to its questionable commercial paper holdings. Tether had officially denied rumours that the company’s commercial paper portfolio is heavily tied up in Chinese/Asian unsecured corporate debts.

Last but not least, Tron’s stablecoin (USDD) once again raised the question of algorithmic stablecoins’ viability: USDD had slipped from its dollar peg, hitting a worrisome $0.958 on Wednesday the 15th. Tron DAO Reserve, whose purpose followed the lead of Luna Foundation Guard for UST, had to withdraw 2.5 billion TRX from Binance (around $125 million at the time) to protect USDD’s peg from short sellers.

Interconnected

Fear and panic spread across the market with two well-respected big names risking insolvency within the same week: Celsius Network and Three Arrows Capital (3AC). At their peaks, both had billions in AUM but are now wobbling as the next high-profile victims of crypto market contagion.

One thing Celsius and 3AC have in common is they were key investors/users of Terra Network, Celsius taking advantage of Anchor’s 20% APY to provide safe and high returns while 3AC being one major supporter of Terra, whose $559.6 million in locked LUNA now worth $670.45.

Bearish sentiment, combined with the possibly slowed Ethereum upgrade, caused the swap rate between staked ETH (stETH), a self-claimed ETH equivalence, to deviate from the original one-by-one ratio and eventually sent Celsius as well as 3AC into free fall. Babel Finance, a Hong Kong-based fund, was another to suffer from stETH’s depegging. The fund has paused all withdrawals, citing “unusual liquidity pressures”.

Ethereum’s Future

Ethereum core devs agreed on the difficulty bomb delay, which had already happened five times before. The difficulty bomb is a part of Ethereum’s original code, designed to make transaction validation harder over time until miners can no longer find the hash needed to mine a new block. Without the increased difficulty, it is unlikely that Ethereum can make the transition into PoS, which is often known as The Merge, by the end of 2022.

Even amid market uncertainties, institutional interest in crypto, particularly in Ethereum didn’t seem to go downhill. Goldman Sachs is now trading Ethereum non-deliverable forwards for the first time. The product is a cash-settled forward contract offered by Marex Financial (UK) for indirect exposure to Ethereum.

Market Meltdown: Laying Off

In response to the dull market, several firms had decided to slash their payrolls. Among them were Coinbase, letting 18% of their employees go, Gemini (10%), Crypto.com (5%), Bitso (80 workers), BlockFi (20%), and the list went on.

The Bottom Line

Yes we have entered very rough waters. But is it enough to crush the hope of every single crypto investor? Headstrong as we are, there is good reason to doubt it. Yet we want to remind you of the advice that always stays true: don’t stop learning about crypto, and keep yourself always informed. Only when you properly understand the brilliant idea behind crypto that you can find the motivation to stick around. And Bitget Academy is your one and only crypto go-to source:

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