Hello! Welcome back to Distributed Ledger, our weekly crypto newsletter that reaches your inbox every Thursday. I’ll walk you through what’s going on in the current bear market.
As usual, find me on Twitter at @FrancesYue_ to send feedback, or tell us what you think we should cover. You can also reach me through email to share your personal stories with crypto.
Crypto in a snap
Bitcoin BTCUSD,
Crypto Metrics
| Biggest Gainers | Price | %7-day return |
| Binance USD | $1.01 | 0.7% |
| Pax Gold | $1,861 | 0.3% |
| Dai | $1 | 0.2% |
| USD Coin | $1.01 | 0.2% |
| TrueUSD | $1 | 0.2% |
| Source: CoinGecko as of June 16 |
| Biggest Decliners | Price | %7-day return |
| DeFiChain | $1.1 | -47.1% |
| Chain | $0.09 | -46.5% |
| Monero | $109.8 | -41.1% |
| Waves | $4.57 | -41% |
| Nexo | $0.73 | -40% |
| Source: CoinGecko as of June 16 |
Bitcoin crash in numbers
Long-term holders selling at losses
During recent selloffs, the amount of long-term bitcoin holders selling at a loss was the largest since March 2019, when bitcoin was trading at around $4,000, according to Julio Moreno, senior market research analyst at CryptoQuant.
The long term output profit ratio, which measures the ratio of spent outputs in profit at the time of the window, stood at 0.47 on Thursday, according to data from CryptoQuant. The indicator provides insight into market sentiment, profitability and losses taken over a particular time-frame. It reflects the degree of realised profit for all coins moved on-chain.Values below 1 shows that more long-term investors are selling at loss, while values above 1 indicate the opposite.
Meanwhile, the average bitcoin holder is experiencing a loss for the first time since March 2020, when Covid-19 broke out in the U.S., Moreno noted.
Net unrealized profit and loss, which could indicate the total amount of profit or loss in all coins, stands at around -0.02. A value below 0 shows that investors are in losses.
Bitcoin halving cycles
Bitcoin could reach a market bottom at some time near the end of 2022 or the beginning of 2023 based on its previous performance during “halving cycles”, analysts at bitcoin company NYDIG wrote in a Wednesday note.
Bitcoin is designed to experience “halving,” which refers to the reduction of the reward paid to miners of a block by 50%, at every 210,000 blocks, or about every four years. Though there have only been three halvings in bitcoin’s history, they all occurred in the middle of bitcoin cyclical highs, the NYDIG analysts wrote.
Meanwhile, bitcoin price’s cycle peaks and troughs tended to appear about 1/3 and 2/3 of the way through each of the halving cycles, respectively, except the first cycle, during which reliable price data was not available until it was well underway, the analysts noted. If the pattern persists, it may imply that we are about six months away from the market bottom, according to the note.
Implied volatility
Bitcoin’s implied volatility on Wednesday reached the highest level since March 2020, according to data from Skew. Though the metric doesn’t reflect price directions, considering the broad bearish sentiment, “the high volatility indicates that Bitcoin has not yet capitulated and could have a further downside,” analysts at 21Shares wrote in Wednesday notes.
Celsius, Three Arrows contagion?
Celsius, one of the biggest crypto lending platforms, paused all withdrawals, swaps and transfers between accounts since Sunday. The company reportedly has hired restructuring attorneys to advise on possible solutions for its mounting financial problems, according to a Tuesday report by the Wall Street Journal.
Meanwhile, rumors swirled over potential stress at the influential hedge fund Three Arrows Capital, following a vague tweet late Tuesday from its founder Zhu Su, who wrote that “we are in the process of communicating with relevant parties and fully committed to working this out.”
On Wednesday, the Block reported that Three Arrows is “in the process of figuring out how to repay lenders and other counterparties after it was liquidated by top tier lending firms in the space.”
Some market participants are now worried about the contagious risks Celsius and Three Arrows Capital may pose to the whole crypto market, if, in a worst-case scenario, the firms were to become insolvent. I wrote more about here.
Crypto companies, funds
Shares of Coinbase Global Inc. COIN,
Mining company Riot Blockchain Inc. RIOT,
Overstock.com Inc. OSTK,
Shares of Block Inc. SQ,
PayPal Holdings Inc. PYPL,
Advanced Micro Devices Inc. AMD,
Among crypto funds, ProShares Bitcoin Strategy ETF BITO,
Grayscale Bitcoin Trust GBTC,
Must Reads
