CryptoPocalypse: What got us here and where next?
We call it the cryptopocalypse and what is behind it. So this is, of course, edutainment. Never financial advice uh were looking at bitcoin dipping under 2300. Again things are not pretty out there by no stretch of the imagination so whats going on. We have this situation right now with what are called cascading liquidations and its a cycle. Thats played out several times in the crypto market, and liquidations are triggered over an overheated over levered marketplace, but this time it goes deeper. Liquidations hit things like lido maker and others today. Well, talk about tron too well talk about celsius, and today is a story about. In light of the recent history of luna. It seems, like other shoes, keep dropping as like the crypto versus not getting a break. Cryptoverse is leveraged its staked and its a fragile place, and back in the day, we used to call this financial contagion and its ugly out there so lets call this defy winter. Welcome to d5 winter everybody we had our d5 summer. Now it is d5 causing a lot of this contagion as well. Traditional markets are also terrible. Gold fell 50 bucks today, which gold has the best macroeconomic backdrop you could possibly imagine and its tanking as well. So the key thing to think about is centralized. Finance has overwhelming greed, defy, has no judgment purely mechanical purely built on computers and data. The consequences take your pick, which one would you prefer um so were going to dig into that today.
That quote, i think words that affect us from bankless today so lets. First of all, talk about what happened with the ethereum ethereum did have a flash crash on uniswap as a collateral dump. This caused a lot of alarm. There was a flash crash. It fell all the way down to, i think 950 dollars from about 1200 1250 and a whale sold their ethereum holdings to pay off about a 73 million dollars worth of debt uh. I think it was on oasis, app, uh, the defile lending platform and again another d5 trigger here. Cascading hits as price goes down more liquidations happen and thats kind of the story of today and the duration of the sell off saw east liquidation price dropping uh. Again, a huge chunk down into three digits which ethereum hasnt been there for a very long time, but theres more. A big part of the alarm yesterday is celsius, suspended, withdrawals, uh, cto larson had a great piece in this earlier today and um. The question is: do we believe you can read it for yourself here? Do we believe celsius is insolvent or is it a bank run situation? Is it a liquidity crisis whos to say at this stage who knows um many believe they could be buying time to retrieve the liquidity, to be able to enable withdrawals again, because a lot of stuff has been rehypothecated. Well, talk about some of that in some of their positions as well as we go through this and their operations require one to one lending, so they have the ability to unwind their rehypothecated positions.
But it takes time to do that and in order to free up liquidity for withdrawals. This is what i believe, theyre doing, um and id like to alex to make a statement very soon. Uh. Thank you for the attacks last night. He said, do not be concerned. So we hope we um hope everything is okay with celsius and i hope we can trust your words. So the good news is a huge part of this is because of the stats you hear a lot of people. Didnt know what steath was a week ago. Now its uh staked eath is now the buzzword of the day and uh. This is its peg actually since january 2022, and you can see its been all over the place, it was actually very volatile. It was below these levels back in early january 2022, and the good news is uh. Our theory is, we believe this cannot unravel, so the staked eth basically is a way of letting people access, liquidity from their staked eath and, ultimately, once ethereum does go to proof of stake. This will be unlocked, so its not like there could be a death spiral. Like, as we saw with ust back in the day, and our theory is arbitrages will take the risk if the peg goes beyond a certain level like like, we see its actually looking at it just live a second ago. Give me one second, and now i cant see it, but it was uh.
It bounced shut up to 96 97, which was a good sign but um. I believe if it does fall to a certain level like 95 90 80 85 arbitrage will jump in and take that risk because they know ethereum will eventually go to proof of stake, so its just about buying the time, so that should be armed away. So there is no not much more, hopefully, downside risk for stake to ethereum, and now the situation with celsius is basically this and the block crypto had a good piece on this with some good data, but to summarize um think of the celsius flow. Just real simple terms on chain activity show the celsius transfer, clients ether. So if you deposit, ether and celsius they put in light of finance and then they deploy the underlying stake to eth collateral for additional yield generation celsius holds about 409 000 staked eath in its wallets and thats worth about half a billion dollars now curve pool also Contains about 120 000 eth paired against 515 000 estate teeth, which is a highly unbalanced ratio of about 19 eath to steak teeth. So one of the problems we have there is its not easy to unravel this position because theres that mismatch the imbalance. So when you have a run on the withdrawals because of all the attacks made, everybody every celsium, very nervous, everyones running for the door and hey presto uh its no longer able to liquidate the positions quick enough, so its whats called a classic catch 22 situation.
So, where we are right now is celsius cannot convert the stake death without an over the counter transaction, i.e somebody whos willing to swap it, and that would probably charge a particularly big fee for now. Celsius owns many tokens that we just covered, but adding fuel to the fire. Uh staked has lost its supposed parity, its down to 0.97, as we speak and so thats. If they were to trade it they would lose well. Theyd have to dump a lot. We should drive the price down further and that would exacerbate losses which is not good, so basically, celsius, cant, sell, said eth on curve unless it wants to really crush the price down. But the point is there is value there. Well, talk more about the value that others see in a minute too, so lets talk about the wrapped bitcoin celsius, rap bitcoin exposure maker. This was another one from dirty bubble media flying around here, and it talks about where they are. Celsius has about 18 000 wrapped bitcoin leveraging maker protocol. This faces liquidation at 22, 584, coincidentally thats pretty much where we got to today. But what celsius did they upped their collateral on maker on the maker volt? And now i think their liquidity price is approximately 18 300, which means celsius has a leeway of about 12, 000, 13 000 wrapped bitcoin to play with so again no big exposure there. But what about maker uh, depending its very very unlikely, because nearly all of the dye generated by collateral is ustc, backed with another 14 or so being usdc derivatives.
Only about 12 is ethereum and the collateral issue ratio. You can see heres 130.6, so there should be. No risk of that happening as well now lets talk about what else is happening in the marketplace. First of all, block fight, ceo zach, prince tweeted. It has zero staked eath exposure, everybodys trying to distance themselves from this calamity and not alarm their customers, because a run could happen on any of these firms too, if they were attacked and kirill nikolov. A decentralized finance strategist at nexo said to the block that nexa holds only a limited number of staked eth, so they have no exposure per se. Its tiny, very, very marginal and nexo is swiss, run highly conservative and a good risk management place. Speaking of nexo, they stepped up, and i read the term sheet letter of intent. They offered to buy crypto assets from celsius. So who knows what could happen here? There was a tweet from alex over the weekend that confused a lot of people. He mentioned celsius 2.0 or the new celsius. I cant remember the exact words, but maybe this has been in the works for a couple of days. Well see so lets talk about maybe some other stuff that could happen and the other shoe that could drop is tron. Uh, i hope you dont mind the little tron logo we put on this red shoe and why tron well, uh tron is cloning luna, not only the clone ethereum white paper word for word, but tron is now copying, lunas decentralized, dollar, ust and they were offering.
I think i remember 40 at the beginning and they just write you down to 30 now its 11 percent yield on their usdd, so lets look at tron for a second. The tron usdd did lose the peg over the last couple of hours causing panic. You can see here its down around point: nine, nine, nine percent. Let me zoom in and try find exactly thats a bit of an eye chart um yeah 0.99.98, but you can see it fell as low as 0.97 losing about 3 percent uh earlier in the day. So there is a lot of anxiety out there, and this could be very similar once again to what happened with the ust. So how is tron fighting this? So the tron dow reserve said on saturday it bought 50 million worth of bitcoin and trx. It says they are 200 percent over catalyzed, but that does not appear to be true and uh. A short squeeze typically occurs when traders are betting on a decline or a force to close their positions by buying back the underlying token. So some noted that the so called funding rate for shorting trx and binax finance had hit 500, which is extreme so a lot of the big shorters. Maybe hedge funds, whoevers behind this is jumping on shorting, the hell out of tron right now, thats. Why theyre willing to pay such a high premium, because theyre that convinced its going to go down and follow the same path of ust and luna? So lets talk about the unraveling and how it looks so so far.
This is a post from rezden and he says its starting. Its starting. First of all, the first yield cut from 40 to 30 to 11, who the heck would take on risk. Uh in this market for 11 yield after everything theyve already seen, so they are probably going to have some liquidity problems and usdd is currently 92 percent collateralized by the reserves, even considering trx funds. But the problem is, if you take out trx, the collateralization ratio is only 73 and the 400 million dollars of usdt are not really usdt. Theyre j. U s d t which is a completely different version, so it may also have no value. So that is the danger here for tron, and this is an interesting meme. Thank you. Sanjay for sharing uh hard times create stable coins, and then stable coins create good times good times, create unstable coins, which weve seen a lot of and unstable coins create hard times. So we are living through. This were in the fourth stage right now of this roman empire, as it were so lets talk about other rattles across the markets exchange rattles here finance resumes withdrawals as many retail crypto investors monitor exchanges. They did pause withdrawals for, i think 24 hours or 48 hours which rattled everybody. Now people are worried about things like coinbase and kraken, and investors are monitoring very carefully. Never before has the not your keys, not your coins mantra been so important. This is also concerned with smaller landing platforms.
This is uh from vogue. We have some people in the community that were able to transfer off of vote very successfully, but others are having some type of delay right now, not causing any alarm. But just this is their service department, saying its purely because of the increased number of withdrawals happening. Currently, please do not panic were in the process of clearing it and youll receive your tokens at the earliest. It took eight hours to get their response, but at least theyre responding. So where are we now now lets talk about bitcoin for a second, the bitcoin news? Yes, markets are very heavily rattled fear and greed is not as low as it should be. Considering all the stuff thats happening, the macro world is a nightmare and its far worse, a lot of the sale of both in equities and crypto and the cascading effects of everything we see. What i just spoke about has exacerbated the impact of that unexpected cpi print. We had on friday, which kicked everybody in the teeth, but lets talk about bitcoin treasuries of note that are underwater and for those of you who are underwater youre in good company, because so is the president of el salvador. So is michael saylor, ceo of mike strategy. So is elon musk, ceo of tesla, and so is jack dorsey, the ceo of square. You can see el salvador 2300 bitcoin average price of 45k. Their dca has probably been the worst uh.
Very sorry about that. Blue kelly and hes been pretty good at buying the dip, but uh misplaced. A couple of things and didnt get in early. He was a late comer to the party. His average price um is 45k price today. Last time i ran this number is 23. well, so slightly lower than right now, its about 23 100. and losses, 50 million dollars for the country of el salvador, but apparently theyve brought in about 1.6 billion in foreign investment over the last year, microstrategy 129 000 bitcoin Average price 30 700 – they are nearly over 900 million underwater right now, nearly a billion dollars and the stock is showing that as well. Uh, tesla, 42000 bitcoin average price 31 620 very similar to the microstrategy price, and they are a third of a billion dollars. Exactly underwater and square 8 000 bitcoin average price 27. jack dorsey has been the best dc air out there hes only 30 million underwater and again hes building an entire revised square, which is now called the block all around web 5 and bitcoin infrastructure. So watch that space carefully that could be defy 2.0 or 5.0 or whatever he has some extremely interesting plans lets talk about a couple of um analysts and what they see. First of all, uh cheers to the real plan. C stay well, buddy uh. He talks about bitcoin entry risk, and here he has all of his different tiers. He actually has entry risk going all the way up to 100.
, which is ceiling. The ceiling model, which is somewhere where you dont, want to buy, and they are represented here by the bands you know – and we are now according to him at risk entry level number one now. The bottom line is the bottom green line there. Typically, it is, as he says, i think, its a five year exponential moving average, so weve seen historically, we only hit this once before, and that was in march 2020, and here we are again, but there are other analysts that see things as well. First of all, glass, node weve got this thing called bitcoin realized price. The realized price for bitcoin is 23 435 dollars. The bitcoin price today is 310 under that exact price right now and its rare uh in this market. If you count the number of days that bitcoin has been under realized price over the last five years, its literally a handful of days, it is not very much at all whats, also interesting to notice how we actually bounced off 226 today and went straight back up To that realized price and now were a little bit underwater again but well see it is the fear and the cascading losses that are keeping people away and making people very nervous out. There now lets talk about, will clemente um, but not all, are staying away and will clemente got most of his bids filled today, as he says, it may not be the pico bottom, but he was happy to allocate for the long haul.
Hes got a very long term view and uh he exhausted his dry powder. The bitcoin realized price was one of the triggers that got him to jump in. It was also the 200 week. Moving average was tapped and ftx and okx quarterlies are in backwardation and it was one of the lowest deviations from the 200 day trend ever so tick, tick, tick, tick, all those boxes, time for him to jump in and finally, it is per blockchain center. This is called a fire sell price and, coincidentally, it pinpoints exactly the celsius wrapped bitcoin maker liquidation price of about 22 604 dollars. That is, according to this rainbow chart the fire sell price ignore the white box there. I pulled this off their twitter feed today, but i copied the black box, which is the correct version um and at the price at the time when they did this earlier today it was 24 thousand um, but the fire sale did hit twenty two six. In fact, we bounced off that uh twenty two four twenty two five level right now, so it is ugly out there um, but you know, as people say its always darkest before the dawn hang tight. Everybody thank you all for being here, um and be kind to each other.