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Bitcoin price continues to fall amid crypto liquidations, fire sales

Bitcoin has resumed its slide this week and the crypto winter is cooling down. Most crypto funds and lenders are on the sidelines, while stock market woes weigh on bitcoin and other cryptocurrencies, which have traded like speculative growth stocks.




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Bitcoin failed to hang above $21,000 earlier in the week and fell as low as $18,650 late Thursday. It quickly recovered $20,000 but fell to around $19,400 on Friday.

Bitcoin price hit an 18-month low near $17,600 on Saturday, June 18.

BTC bears have outperformed bulls all week. Crypto short interest is higher than long interest, which means most traders believe the price could fall. Bitcoin has a long/short ratio of 0.98, according to CoinGlass data. Over the past 24 hours, more than $238 million in Bitcoin and Ethereum futures have been liquidated as leveraged positions were unable to meet margin requirements.


What is margin trading? How it can leverage profits – and bad losses


But it’s not all bad news for digital assets. The European Union passed legislation to regulate crypto assets and services across its 27 countries. The policies require crypto issues to register with authorities and publish white papers – documents that describe the projects’ technology and purpose. The new law, known as Markets in Crypto Assets (MiCA), will ensure exchanges maintain stablecoin reserves to prevent mass withdrawals.

While the industry generally adheres to regulations and compliance, the new rules provide much-needed security and confidence.

In May, algorithmic stablecoin TeraUSD and its sister coin Luna collapsed, wiping out $40 billion in value. That sent shockwaves of losses across crypto and left some firms like Three Arrows Capital exposed to LUNA unsalvageable.

Three Arrows Capital Liquidation

On Thursday, a British Virgin Islands court ordered Three Arrows Capital (3AC) into liquidation after defaulting on bitcoin loans. Crypto Hedge Fund Couldn’t Pay Its 15,250 BTC And $350 Million USDC Loan From Broker Voyager Digital (VYGVF). Based on the price of BTC, it was around $807 million in early June but only around $643.5 million at the time of writing this report. 3AC borrowed from lender BlockFi and liquidated its positions after being unable to meet margin calls.

Buy BlockFi

Things have gone from bad to worse for BlockFi. On June 21, the crypto exchange had to secure a $250 million credit facility from FTX to shore up its balance sheet. FTX will reportedly buy BlockFi outright for a clearance price of between $25 million and $50 million. CoinDesk reported that BlockFi’s loan came with a discounted purchase option. And it’s currently valued at $500 million, according to a Morgan Creek Digital call with investors. The Morgan Creek investment firm is seeking to raise $250 million to buy a larger stake in BlockFi, according to a leaked call. Last July, BlockFi was valued at around $5 billion and was talking about going public. Visa (V) Partnered with BlockFi in December 2020 to offer cash back in Bitcoin form.


Why This Bitcoin Crash Is The Crypto Ice Age


Morgan Creek isn’t the only one upset by the deal. FTX is in talks with crypto lending platform Celsius. But FTX walked away because of a $2 billion hole in Celsius’ balance sheet, The Block reported. On June 12, Celsius suspended withdrawals and transfers due to severe market conditions, locking the funds of its 1.7 million users. The company said it had about $12 billion in assets under management in May.

“We are focused and working quickly to stabilize liquidity and operations to position ourselves to share more information with the community,” Celsius announced in a blog post Thursday. The company says it is taking steps to preserve assets and explore options such as pursuing strategic transactions and restructuring liabilities.

Denial of GBTC

Grayscale is suing the SEC after regulators rejected its bid to convert its Grayscale Bitcoin Trust (GBTC) into a spot bitcoin ETF. Grayscale originally filed to convert GBTC into an ETF in October 2021 but faced multiple delays in the ruling. The SEC cited concerns about potential market manipulation in its denial on Wednesday. Grayscale said the SEC was being inconsistent by approving bitcoin futures ETFs but denying ETFs that hold the same asset.


ETF news


On Wednesday, Meta (META) product manager Navdeep Singh announced that the company is launching NFTs on Facebook. In the post, Singh shared images of a new ‘Digital Collections’ tab on profile pages to showcase NFTs. Meta previously started tests to add NFTs to Instagram in May. In the post, CEO Mark Zuckerberg said the company plans to work on 3D NFTs for its augmented reality platforms. Meta also makes the Meta Masks virtual reality headset, formerly known as the Oculus Quest.

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