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Analysis

The current Celsius, 3AC situation may not be as bad as rumors suggest

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The current Celsius, 3AC situation may not be as bad as rumors suggest

The current Celsius, 3AC situation may not be as bad as rumors suggest Liam ‘Akiba’ Wright · 11 hours ago · 4 min read

3AC debt exposure may be as high as $1.5B but is the real risk related to the fear, uncertainty, and doubt this has created?

4 min read

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Updated: June 19, 2022 at 11:41 pm

Cover art/illustration via CryptoSlate

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One of the more concerning issues around the current insolvency fears for several centralized lenders and investors is the lack of transparency. The news cycle is filled with rumors and theories around Three Arrows Capital (3AC) and Celsius, but very few verifiable facts that we can responsibly report. However, several notable people in the crypto industry working in the intelligence space have released in-depth analyses.

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Is the fallout as bad as predicted?

One of which is the founder of market intelligence company Messari, Ryan Selkis, who ran a Twitter Space where he explored information he had gathered behind the scenes. Selkis downplayed the severity of the 3AC crisis, estimating that there is around.

“$1.5B of net liabilities in terms of how underwater 3AC is… and some proof that it’s been business as usual for basically any counterparty that’s I’ve talked to that’s been transacting with these guys.”

Selkis went on to further explain the crisis stating that “all the FUD around the sky is falling for the western lenders I think is probably overbaked right now.”

Many funds, projects, and lending platforms quickly distance themselves from Celsius and 3AC this week. Some have also come out to confirm liquidations of positions of large third parties. Tether announced they no longer had exposure to Celsius as funds were “liquidated without losses.” The Block also reported that “Crypto exchanges FTX, Deribit, and BitMEX have liquidated Three Arrows Capital’s positions over the past week.”

BlockFi and Genesis both created Twitter threads detailing that they had liquidated a sizeable third party over the past week. However, as neither specifically named 3AC, this could potentially be another large crypto company that has also been struggling with liquidity and under collateralized loans. 3AC lists BlockFi on their website as an investment partner but not Genesis. Many, including Ryan Selkis, believe these positions were, in fact, 3AC, but this is merely conjectured at this point.

If the total exposure for 3AC is $1.5B, as suggested by Selkis, then the direct effect on the market may be pretty minimal. That level of debt would represent just over 1% of the total market cap of the crypto industry and is less than the value of Bitcoin dumped by Terraform Labs during the LUNA crisis. The decline in Bitcoin price may then be mostly contagion from the fear, uncertainty, and doubt created by Celsius, Terra, and 3AC, all having crisis moments within a month.

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Industry Insiders discuss the crisis.

Selkis was joined in the Twitter Space with some other prominent CEOs and analysts from within the crypto ecosystem, including the CEO of BlockFi, Zac Prince. Prince stated that given the current state of crypto lending, “a self-regulatory path is not a particularly viable option.” Earlier in the conversation, he also confirmed that he agreed that regulation would “need to be worked out” following the current crisis.

Also on the call, Frank Chapparo, the editor at The Block, claimed that 3AC has been

“hitting up everyone trading desks, token projects… to profit from a GBTC arbitrage trade…and they kind of knew the merry-go-round was coming to an end… they potentially figured out they could win it all back in one trade.”

Chapparo also confirmed that he had spoken to projects that said 3AC had contacted them to take on:

“Their entire treasury to do treasury management for these projects and the entire treasury…They were being pitched on having them sent 3 arrows, you know, hundreds of millions of dollars of their treasuries tokens.”

According to Chapparo, “the terms of some of these deals are also really bad,” suggesting that there may be some severe fallout for any company that accepted 3ACs offer to hold its treasury. Selkis, earlier in the conversation, mentioned a valid point that these projects are unlikely to come forward at this time as it could both tank their token prices and reduce their positioning in any future litigation against 3AC.

Both The Defi Edge and FatManTerra have reported that 3AC offered a yield return of 8% for holding project treasuries. Defi Edge claims that projects have reported being “ghosted” by 3AC when attempts have been made to contact the firm. It stated, “now we’re in a situation where SOME of the protocols they’ve invested in…their treasuries might be gone.” In this instance, the fallout for these projects could be enormous. FatManTerra built on these claims saying

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“3AC borrowed money from multiple funds and counterparties and put it into Anchor to generate yield without telling them. Their UST position was confirmed to be at least nine figures before the Terra depegging event.”

Three Arrows Capital Website

Interestingly, to access the 3AC website, users must acknowledge a terms and conditions pop-up that contains a disclaimer explaining that.

“because of the risks involved, investment in a Three Arrows Capital fund is only suitable for sophisticated investors who can bear the loss of a substantial portion or even all the money the invest in the Fund without altering their standard of living.”

The language in this clause is slightly unusual as it references “standard of living” as a critical indicator. This phrasing could potentially become a primary focus of future litigation as counterparties may reasonably argue that their standard of living has decreased after losing hundreds of millions of dollars.

The entire situation is shrouded in mystery. This is a difficult position to accept in an industry used to the transparency of on-chain transactions. Increased transparency is needed to reinstate confidence in the markets. Investors currently have no idea where to put their money in order to gain even a small yield. Crypto wallets remain one of the most secure places to store funds during chaotic times and many are reaffirming the motto, “not your keys, not your coins.”

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Analysis

Biggest Movers:  XRP Up By Nearly 15%, As AVAX Climbs To 12-Day High On Friday

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Biggest Movers:  XRP Up By Nearly 15%, As AVAX Climbs To 12-Day High On Friday

XRP rose by nearly 15% during today’s session, climbing to its highest point in over a week in the process. This rise in momentum within the crypto market also saw AVAX hit a 12-day high, following a gain of over 11% on Friday.

XRP

Bullish pressure in XRP intensified on Friday, as prices rose to their highest point in over a week during today’s session.

Today’s surge saw XRP/USD rally to an intraday high of $0.3847, which is its highest point since June 11.

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Overall, prices are currently 13.6% higher than Thursday’s low of $0.3244, and this comes after a marginal breakout of a key price ceiling.

XRP/USD – Daily Chart

This resistance point was at the $0.3800 mark, and was broken as short-term momentum continued to move upwards.

Looking at the chart, the moving average of 10 days (red) confirms this shift in direction, with the trend now heading higher.

In addition to this, the 14-day RSI is tracking at its highest point in over three months, after hitting a high of 50.71 earlier today.

However, this point is also a resistance level, which is why earlier gains have somewhat eased, as some bulls likely liquidated positions.

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Avalanche (AVAX)

AVAX was another notable mover to end the week, as prices moved close to a key mark of $20 on Friday.

Following a slow start to the week that saw AVAX/USD hit an all-time low of $13.53, prices rose to a peak of $19.97 earlier today.

This move saw prices rise by as much as 13% in the day, with bulls attempting to break out of the current ceiling.

AVAX/USD – Daily Chart

Despite this rise in bullish pressure, the resistance of $20 has so far held firm in today’s session, with prices now trading at $19.29 as of writing.

One reason for this might be that we have also seen the Relative Strength Index hit a ceiling of its own.

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As a result of this, we may not see enough bulls re-enter the market to help lead a breakout of the $20 level.

Do you expect AVAX to break out of this resistance this weekend? Let us know your thoughts in the comments.

Eliman Dambell

Eliman brings a eclectic point of view to market analysis, having worked as a brokerage director, retail trading educator, and market commentator in Crypto, Stocks and FX.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Analysis

Bitcoin, Ethereum Technical Analysis: ETH On The Cusp Of $1,200 Following Breakout Of Key Resistance Level

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Bitcoin, Ethereum Technical Analysis: ETH On The Cusp Of $1,200 Following Breakout Of Key Resistance Level

Bitcoin edged marginally higher on the last Friday of the month, breaking out of its recent resistance of $21,100 in the process. ETH was also in the green during today’s session, climbing by nearly 5% to move past a price ceiling of its own.

Bitcoin

Following a turbulent week of trading, BTC was once again higher on Friday, as prices moved above $21,000 heading into the weekend.

Less than a day after trading at a low of $20,233.56, BTC/USD rallied to an intraday peak of $21,266.39

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Friday’s flurry of trading saw prices move past a key resistance point of $21,100, and this comes as bulls continue to buy the recent bitcoin dip.

BTC/USD – Daily Chart

After overcoming today’s hurdle, it is likely that traders will target this week’s high of $21,700 over the course of the weekend.

Looking at the chart, should this level be achieved, we will likely see many bulls choose to secure gains and exit positions, due to an upcoming ceiling on the 14-day RSI.

This hurdle is the 36.70 point on the Relative Strength Index, which is currently tracking at 35, and is firmly in oversold territory.

Ethereum

Ethereum was fast approaching $1,200 on Friday, as bullish momentum took prices above a key level of resistance.

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After almost falling below $1,000 during Thursday’s session, ETH/USD surged to an intraday high of $1,191.27 as of writing.

This peak saw the world’s second largest crypto token trade nearly 8% higher than yesterday’s floor, breaking the $1,190 ceiling in the process.

ETH/USD – Daily Chart

As discussed yesterday, this level was one of the only hurdles in place preventing prices from re-entering the $1,200 region.

Today’s mounting pressure from ETH bulls comes after the 35.60 ceiling of the 14-day RSI was broken on Thursday.

With a breakout likely later in today’s session, the only question is where bulls will choose to exercise an exit.

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How high do you expect ETH to climb this weekend? Leave your thoughts in the comments below.

Eliman Dambell

Eliman brings a eclectic point of view to market analysis, having worked as a brokerage director, retail trading educator, and market commentator in Crypto, Stocks and FX.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Analysis

Biggest Movers: MATIC Climbs 25%, Re-Enters Crypto Top 20 

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Biggest Movers: MATIC Climbs 25%, Re-Enters Crypto Top 20 

MATIC moved back into the cryptocurrency top 20 on Thursday, as prices rose by over 25% in today’s session. The token replaced FTT, which entered the list following declines in MATIC on Wednesday. ATOM also rose today, hitting a 12-day high in the process.

Polygon (MATIC)

MATIC was one of the standout movers in crypto markets on Thursday, as the token re-entered the top-20 list.

Following a low of $0.4042 on Wednesday, MATIC/USD surged to an intraday peak of $0.5145 earlier today.

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This move saw MATIC become the world’s 18th largest cryptocurrency by market capitalization, all while hitting an 11-day peak.

MATIC/USD – Daily Chart

Despite these gains, it appears that bulls are looking towards the ceiling of $0.6650 as the next price target.

Overall, MATIC has risen by over 25% in today’s session, with its seven-day average now nearing a 30% increase.

In addition to this, the 14-day RSI is tracking at its highest point in over three months, after hitting a high of 48.64 earlier today.

All in all, sentiment seems to be firmly bullish in the short-term, however traders will see if this matures into the mid-term.

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Cosmos (ATOM)

ATOM also rose to an 11-day high on Thursday, as prices rose for a fifth consecutive session.

Following a breakout of its floor at $5.50 last week, which saw prices hit their lowest point since January 2021, ATOM bulls re-entered the market with full force.

As a result of this short-term rise in bullish sentiment, ATOM/USD rose to an intraday peak of $7.73 earlier today.

ATOM/USD – Daily Chart

This gain means prices are now trading nearly 12% higher than yesterday’s lows, sending them to their most valuable level since June 12.

Looking at the chart, this uptake in momentum has meant that the moving average of ten days is now nearing a potential cross with that of the 25-day SMA.

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Should this occur, then we will likely see prices not only reach, but breakout of, resistance at $10.

Do you expect ATOM to break out of this resistance before the month ends? Let us know your thoughts in the comments.

Eliman Dambell

Eliman brings a eclectic point of view to market analysis, having worked as a brokerage director, retail trading educator, and market commentator in Crypto, Stocks and FX.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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