It’s ugly in crypto with $ 200 million margin calls, founders selling homes and comparisons to 2008

Don’t miss CoinDesk’s Consensus 2022, this year’s crypto and blockchain festival experience in Austin, TX this June 9-12.

Good morning, and welcome to First Mover. My name is Lyllah Ledesma, here to take you through the latest in crypto markets, news and insights.

• Price point: Although BTC appears to be stabilizing, a number of new developments are continuing among the crypto companies that have been destroyed by the market turmoil.

• Market movements: How much more sharing leverage in the crypto market needs to happen? JPMorgan’s Nikolaos Panigirtzoglou weighs in.

Price point

The fallout from this year’s striking fall in cryptocurrency prices continues, even though the price of bitcoin seemed to stabilize at just under $ 20,000.

Bitcoin (BTC) traded 1% up on the day, to around 19,100 dollars.

The world’s largest cryptocurrency measured in market value has traded down 7% in the last seven days, and ether (ETH) has also fallen by 12% in the last seven days.

Futures tracking BTC and ETH raised nearly $ 200 million in liquidations as volatility on Thursday saw prices break back and forth below resistance levels.

The number of active crypto users among Bank of America (BAC) customers fell more than 50% to less than 500,000 between November and May, according to a new report from the bank.

In Central America, El Salvador’s President Nayib Bukele tweeted that country bought 80 bitcoin to $ 19,000 each.

Meanwhile, there were a number of developments among crypto companies that were ruined by the market turmoil, who now want to restructure their economy or are looking for a lifeline from peers with better capital.

Celsius shareholder “BnkToTheFuture” proposed three recovery plans on Thursday aimed at helping users affected by the insolvency of the cryptocurrency lender.

The crypto exchanges Blockchain.com and Deribit have said that they are collaborating with ongoing investigations of Three Arrows Capital (3AC). Blockchain.com wrote in a report that the hedge fund “scammed the crypto industry”.

The story continues

Su Zhu, co-founder of 3AC, wants to sell his house in Singapore, bought in December for $ 35 million.

Some analysts compare all the pain with the financial crisis in 2008. Read down to Market movements for more on that.

I have also read an interesting, in-depth thread of TaschaLabs about how the next wave of crypto-adoption will come from tool symbols from real companies. You can read it here.

Market movements

The erosion of values ​​in the recent downturn has been staggering for an industry that seemed to be shooting at all cylinders as late as last year. The current market value of all cryptocurrencies is around $ 850 billion. In November 2021, the total market value was almost $ 3 trillion. This is a cumulative decline of 70% so far since then.

The crypto market is now suffering from what some analysts describe as a credit crunch. This has revealed the fragile system of credit and influence in crypto, increasingly compared to the Wall Street crash of 2008. It began with the collapse of Terra’s UST stablecoin – meant to be worth $ 1, well as cash. It is now clear how many centralized crypto borrowers gave unsustainable returns.

Nikolaos Panigirtzoglou, cross-asset analyst at JPMorgan, wrote in a LinkedIn post on Friday that it is difficult to say how much more sharing leverage still needs to happen in the market. Referring to the bank’s net leverage metric, which is based on futures, he wrote that it suggests that partial leverage is already well advanced.

“Similar to the lending of the credit market seen after the Lehman crisis [when the brokerage firm failed in 2008]the bottom of the crypto markets will probably take place before the error rate among crypto companies peaks “, wrote Panigirtzoglou.

He said there are two more reasons to believe that the current repayment cycle will not be very long: “1) the fact that cryptocurrencies with the stronger balances are currently stepping in to help limit infection and 2) VC funding a important source of capital for the crypto ecosystem continued at a healthy pace in May and June. “

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Today’s newsletter was edited by Parikshit Mishra and produced by Stephen Alpher.