It's over. Crypto Crash of 2022.
I kept saying its gon na blow up. It happened and those people who didnt listen ended up losing massive amounts of money. Welcome to the crypto crash of 2022. We are living through history, epic times just today. Ethereum is down 18 and over the past month, 36 bitcoin down 15 and over the past month about 17. So a little bit more modest losses. There dogecoin down 35 solana down 40 avex, one of the big losers down almost 50 over the past month, and these other l1 chains polygon near phantom down 30 to 40 for the month, most cryptos down 15 for the day – and most of this has been triggered By the collapse of celsius networks, so celsius is a c5 centralized finance lender out there, where a lot of people can stake their coins for a little bit of apr interest back on their money. The problem is last night celsius, paused all withdrawals, swaps and transfers between accounts, freezing all of the money, essentially taking all of the money, because they became insolvent at something we were hinting at last video, which is the deepak between staked eath and eve, so stake the Therm is essentially a therm version, 2.0 staked onto the validator nodes in which it would be unlocked much later on, maybe months or even years later, and so what celsius did is they would just take the ethereum users gave them and stake them for a little bit Of additional yield, maybe four percent extra, assuming that the ethereum and state ether would be pegged one to one which typically, it is now.
The problem is this began to depend, and what celsius would do is just take the ether that users deposited with them and stake. It only 27 of their theorem is actually liquid, so theyre very susceptible to bank runs, and so, when users noticed this d pack, along with general market volatility, they began to panic, demanding their ethereum back, forcing celsius to further liquidate even more ethereum back into ethereum. And this would cause the d pack to further strengthen and cause massive losses for celsius. We can see the pack for stake its currently at 0.94 as low as 0.93 earlier this morning, which represents like a six to seven percent loss on all of the staked ethereum. That celsius holds, which is hundreds of millions of dollars worth. They need to recover this money from somewhere and the problem is anytime. You gave them a theorem, they just converted it into staked ethereum thinking. It was a one to one trade, a one to one pack, but it is not actually pegged like that. So people just blindly made that fossil assumption and it was a critical flaw thinking that what therms a blue chip crypto lido finance their blue chip d5 company. This is gon na be safe, its not safe at all, and the peg cannot be assumed because, if you go over to light of finance, theyll tell you all of the risks of staked eath right there. Early stakers will lock their if their mental transactions are enabled on ether 2.
0, which could be months or even years later on, and that it is basically illiquid, and so they say there is price risk that the exchange price of stack diatherm is lower than the inherent Value due to withdrawal restrictions so im not sure why we ever made the assumption that these should be one to one. When you know staked each should probably be at a lower valuation than normal ethereum. Now the problem is what people like to do is theyll. Take their stake: ethereum go to a landing protocol like ave and their depositors they eat and then borrow against it so that they can leverage in on this, and so when steak eats starts to collapse and press, it can cause contagion and massive liquidations everywhere. Now we can actually check one of celsiuss main d5 wallets here, currently managing about 500 million dollars worth of funds, and we can see theyve deposited into ave about 460 million dollars worth of staked ethereum and they kind of just assumed that this would be packed one To one to ethereum and they borrowed a bunch of stable coins against that, so the concern here is: if staked ethereum continues to depect, they need to de risk their trade. You can see their health ratio here currently at 1.54. If this drops below one, then they will be liquidated on this position and it could cause cascading liquidations across other companies as well. Basically, d5 contagion and you can see theyve been trying to manage their positions here, repaying off a lot of their debt.
Millions of dollars worth of that tier 10 million usdc repaid to compound another 8 million dollars here: 65 million dollars of usdc repay to ave as theyre, trying to unwind and de risk their position and exposure to staked ethereum. But for the meanwhile. In order to try to calm the bank ground and to halt the further defect of state ethereum to ethereum, which would cause further massive losses for celsius, they have frozen user funds into huddle mode and so its because of all this leverage and the cascading liquidations. And then the removing of liquidity that is causing so much market panic and the crash of the markets down 15 for the day we can actually see it is causing tether to also further depict again here as well tether going out of balance in the curve pools. As people are concerned, that tether also has exposure to celsius. They invested some portion of funds into celsius which is now possibly going bankrupt. Some of these other stable coins, also going out of balance due to market panic, alchemy usd going out of balance as well as liquidy usd this situation. Isnt helped by finance now also freezing bitcoin withdrawals, allegedly due to a stuck transaction, causing a backlog but well see how that resolves. The crashing crypto markets have also affected some stock prices, as well tesla down six percent. For the day you know, tesla owns some bitcoin coinbase down 11 and microstrategy down 22 for the day in which sailor noted that microstrategys bitcoin positions would start being liquidated if bitcoin were to drop below about one thousand dollars, which is about ten percent down from the Current price range, so, if microstrategy starts getting liquidated, were going to see a massive drop in bitcoin prices as well, possibly now, if these liquidations start happening, i think that could be a pretty interesting buying range, but we can see here, bitcoin whale number.
Nine actually has been accumulating bitcoin this entire time, and even just today they bought another 170 million dollars worth of bitcoin. Just today noticing the price drop, so some people definitely are accumulating. If we come into the bitcoin price charge, we can see there is this large head and shoulders pattern if bitcoin continues dropping the next price support range is going to be at about 19 000, which is past microstrategys, liquidation point, so web 3, maybe its over web 3 employees are being fired, crypto.com is laying off 5 of its workforce about 260 employees after coinbase rescinded a bunch of offers. Last week, so whats good out here: tara 2.0 web 5 yeah, maybe wipe 5, which jack dorsey announced earlier. This is going to be a decentralized web platform built on bitcoin blockchain, so web 5 actually looks pretty cool its only a set of protocols at this point still heavily in development, but its going to be a set of decentralized identifiers along with a bunch of decentralized Web nodes that will distribute this platform and its going to be powered by the bitcoin blockchain, in which theres, no other random tokens or shilling going around. So thats really going to be all about the technology in which users finally get to own their identity and their credentials. You know my only concern here is the first rule of web 3 is essentially that if a user can lose their private keys, they will so while good in theory, i dont think you can actually trust a user to own anything of value, because theyre just going To lose it if youve ever clicked the forgot password link, then youll know what im talking about.
You know things like user data credentials or assets may best be left in the hands of a centralized service provider for most of the population, all right. So what opportunity is there out there? Maybe a lot actually right. If you want to catch a falling knife, now, wouldnt be the worst time to start buying into crypto, although you can also try waiting to see if any more cascading liquidations happen. I think theres a lot of opportunity and stable coin yields too. Actually, if you want to get into d5, and so the funny thing is during times of market volatility, you can actually earn a lot on stable coins due to the massive volume which is going to generate a lot of transaction fees for the d5 providers. For example, here we can see: usdc died, getting 98 apr interest for the stablecoin pair. You can get maybe 14 on usdce to usdc on avalanche, quick swap for polygon. We can see. Usdc died doing 22 interest. So if you want to learn more about stablecoin liquidity and d5 check out my program, d5pro.dev ill get you set up on how to make passive income with crypto, while taking minimal risk check it out pro dot dev. So where do we go from here? Well, it is darkest before the dawn, glass node actually had a pretty interesting analysis right up on bitcoin, in which they noted that bitcoin is starting to get close to its realized price, which is the price that people actually bought bitcoin at and so every time the Price dips into this realized press region.
It signals possibly the end, may be in sight now. As for me, you guys theres an interesting chart. I want to show you here, which is ethereum press and bitcoin price, and you can see how this is starting to diverge. Actually so, while for most of last year, ethereum and bitcoin, traded together in tandem, ethereum is now decoupling dropping off from bitcoin.