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  • Crypto volatility back to FTX levels, with $791 million of liquidations in 4 days as SVB collapse rocks market

    Crypto volatility back to FTX levels, with $791 million of liquidations in 4 days as SVB collapse rocks market

    Key Takeaways

    • Crypto volatility is back up to levels last seen when FTX collapsed in November
    • $791 million of liquidations rocked investors between Thursday and Sunday
    • $383 million of longs were liquidated on Thursday and Friday, the largest 48-hour number of the year
    • News that deposits will be made whole at SVB propelled the market upwards late on Sunday, with $150 million of short sellers liquidated as Bitcoin retook $22,000
    • Despite Fed move stablising prices and 2023 showing a bounceback, the long-term implications for the crypto market are negative here and should concern investors

    For once, it’s not crypto doing the collapsing. Trad-fi was feeling left out of the party, evidently, as the banking sector wobbled in a big way this weekend. 

    Silicon Valley Bank (SVB) is no more, in what amounts to the largest collapse of a US bank since 2008, when Lehman Brothers pulled its best Satoshi Nakamoto impression and disappeared into the ether (pun not intended). 

    While the drama may have centred in trad-fi, crypto bounced around aggressively over the weekend as a variety of knock-on effects rumbled. SVB was a crypto-friendly bank, as was Silvergate, which was announced to also be winding down last night. 

    This, as well as the fact that the entire financial markets wobbled, meant crypto faced a storm. We have dug into some of the movements here at https://coinjournal.net/ to sum up the carnage. 

    Liquidations 

    With violent price swings, liquidations were inevitable. Longs got caught out badly on Thursday and Friday, as the Bitcoin price fell south of $20,000. 

    There were $249 million of long liquidations across exchanges on Thursday, with Friday bringing an additional $134 million. The $383 million of long liquidations was the most in any 48 hour period this year. 

    Volatility

    Obviously, liquidations stem from volatility. Looking at Bitcoin to dissect the extent of the movements, the volatility is now back up to levels last seen when FTX collapsed in November. 

    The chart below shows that the metric had been rising steadily, before SVB going poof kicked it back up to a mark 3-Day volatility mark of 50%, last seen when Sam Bankman-Fried’s fun and games were revealed to the public.

    “We have been seeing relatively muted action in the crypto markets since the FTX collapse last November” said Max Coupland, Director of CoinJournal. “The SVB event served to kick volatility back up to levels we last saw amid all the crypto scandals of last year – not only FTX, but Celsius, LUNA etc. The difference with this event is that the crash was sparked in trad-fi for a change”.

    Crypto bounces back

    But all is well that ends well. Or something along those lines, as despite SVB going under, the Fed announced last night, after a weekend of chaos, that all deposits at SVB would be made whole. 

    The bail-out (if you can call it that, as SVB is still going under) quelled up fear in the markets that the issue could become systemic. Crypto roared back, with Bitcoin spiking back up to $22,000 at time of writing. And this time, it was shorts who got caught offside, with $150 million liquidated across the market Sunday. 

    Perhaps the biggest winner of all was the world’s second-biggest stablecoin, USDC. 25% of the stablecoin’s reserves are backed by cash. Crucially, 8.25% ($3.3 billion) of reserves were (are) trapped in SVB, with the stablecoin dipping below 90 cents on several major exchanges over the weekend. 

    At press time, the peg has been largely restored as the crypto market bounces upward, with Bitcoin north of $24,000.  

    What next for crypto?

    And so, the immediate storm appears to have been weathered in cryptoland. 

    Nonetheless, the past few days present as yet another crushing blow. Three of the big crypto banks – SVB, Silvergate and Signature – are now no more. These banks allowed crypto firms to offer on-ramping from fiat into crypto 24/7 through their settlement services, in contrast to the regular banking hours of the banking sector. 

    Liquidity and volume thus may dip even further in the crypto market, after a year that has already seen volumes, prices and interest in the space freefall. 

    Despite the Fed stepping in to shore up deposits and hence stabilising the stablecoin market and wider crypto prices, the long-term future of the cryptocurrency industry in the US has taken another heavy body blow this weekend. And with the US being the biggest financial market in the world, that is very bad news. 

    Coupled with the regulatory clampdown by the SEC in the last few months, 2023 has followed 2022 in creating a more hostile and bearish environment for the sector at large. 

    So crypto investors may have seen a bounceback in prices in the last few months, but this appears to be largely macro-driven correlation with the stock market, as the underlying events in the industry – regulation, more bankruptcies, and crypto-friendly banks shuttering – have not been positive. 

    If you use our data, then we would appreciate a link back to https://coinjournal.net. Crediting our work with a link helps us to keep providing you with data analysis research.

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  • GMX token (GMX/USD) benefits from FTX collapse and breaks from consolidation

    GMX token (GMX/USD) benefits from FTX collapse and breaks from consolidation

    • GMX token has more than doubled in price

    • The DEX has witnessed increased activity in November

    • GMX broke from consolidation and is a buy on a retracement

    GMX token (GMX/USD) has doubled in price. Trading at just $25 on November 10, the cryptocurrency touched a high of $59 on December 2. The gains come amid an influx of investors post-FTX collapse. As of press time, GMX was trading at $56.

    The collapse of the FTX exchange fueled demand for decentralised exchanges or DEX. Among the DEXs that became popular were GMX and Uniswap. Both platforms saw increased investors’ interest, fueling gains in the native tokens. Yet, on November 28, GMX saw $1.15 million in daily trading fees. The fees surpassed those earned by Uniswap for the first time in history. That underlined that investors look at the lesser-known DEX as a serious rival to Uniswap.

    Market analyst Zen commented on the recent performance of GMX compared to Uniswap. The market analyst says GMX’s performance stems from investors receiving favourable trading fees of about 30%. Users on Uniswap do not get shares from the protocol’s trading fees. Zen says that GMX is a buy-and-hold in the bear market. He also lauds the platform as being the second-highest platform consistently after Uniswap.

    GMX technical outlook as price aims for the stars

    GMX/USD Chart by TradingView

    Technically, GMX broke above a resistance at $49. The cryptocurrency has also been trading on an ascending channel, now invalidated as the price broke out on the upper band.

    An RSI reading of 70 suggests that GMX is entering overbought levels. The cryptocurrency is also facing minor resistance, and a correction could occur before the next bull leg.

    When to buy GMX?

    A breakout at the crucial resistance and strong fundamentals supports buying GMX. However, from the price action and indicators, GMX could be due for a correction. 

    A potential price retracement towards $49 is on the horizon. Investors should take advantage of a correction and buy lower. 

    Where to buy GMX

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  • FTX insolvent – what next for crypto?

    FTX insolvent – what next for crypto?

    I published an analysis three weeks ago outlining that I feared Bitcoin was one bad news event from a plunge down towards $15,000.

    And hell, did we get that event.

    Now I didn’t quite predict this. My piece made no reference to anything to do with FTX. Not only that, but I have waxed lyrical in the past about Bankman-Fried’s acumen. I misread his character massively, and I was very wrong.

    In an examination of FTX’s solvency published on Monday morning, I still believed it was highly unlikely that FTX were insolvent. 

    I have also gone on record many a time repeating the same old adage: playing with Bitcoin in the short-term is akin to spinning a roulette wheel.

    But as we hung around $20,000, and headed into a winter awash with ominous variables like an energy crisis, high inflation, a nasty geopolitical climate and political upheaval in the US, UK and in many nations across Europe, risk was extremely high.

    And then an extraneous variable – FTX imploding. And in the words of the wonderful Black Eyed Peas, “it’s going down now and not a tad bit later”.

    Is it time to buy the dip?

    I don’t like this question for two reasons.

    The first is that, being a random boy on the Internet, how am I meant to know? Like I said a few sentences ago, betting short-term on Bitcoin is like spinning a roulette wheel. My opinion on whether I fancy red or black would be just as valid as to what I think about Bitcoin’s short-term action will be.

    The second reason is that this question is almost a muscle-memory reaction to crypto prices falling. Born out of the culture in the space, I suppose. Central to it is people pointing to past cycles and referencing how Bitcoin has always returned. But they fail to realise something.

    Bitcoin was launched in January 2009, into one of the longest and most explosive bull runs in history. As of this year, that is no longer the case. The free money has been turned off – then Federal Reserve raising interest rates at historically fast rates, with inflation at levels not seen since the 70’s.

    This is the first time that Bitcoin has ever experienced a wider economy bear market. And for that reason, all bets are off. And it is now trading at levels lower than it was five years ago in December 2017.  

    There is no such thing as buying dips and laughing your way to the bank. A glance at the above chart will show quite how many dips there have been this year. This thing is hard. Trading is hard. Crypto is a volatile game. For every screenshot of 100X gains you see on Twitter, there are 100 more people who lost it all. 

    Don’t take eyes off wider economy

    FTX imploding is wild. And it’s incredibly bearish for the crypto economy at large. Expect some contagion to ripple out of this, as we don’t know yet who was exposed to who – but FTX, as such a large player in the industry, will no doubt drag a few bodies down with them.

    But don’t take your eyes off the bigger trend. Crypto is following the stock market. Blue chip assets like Bitcoin and Ethereum are the tail on the dog, with the dog being the stock market. And that stock market is oscillating back and forth over inflation readings and the Federal Reserve’s approach to interest rates.

    I wrote last month about how this correlation between stocks and Bitcoin is as high as it has ever been. It picked up markedly in April 2022, right as we transitioned to this high-interest rate environment.

    In the short-term, this FTX episode needs to play out. Contagion will ripple, news will break, surprises will come out. And then after that, it’s back to watching the stock market. If it wasn’t clear already – the crypto markets are merciless. Don’t forget that, and stay safe.

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  • Dogeliens, Shiba Inu, and FTX Token are 3 Potentially Profitable Cryptocurrencies for Long-Term Holdings

    Dogeliens, Shiba Inu, and FTX Token are 3 Potentially Profitable Cryptocurrencies for Long-Term Holdings

    As the crypto market is going through a rough patch, Dogeliens, Shiba Inu and FTX tokens might help the investors gain profits they are looking for.

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