Report: Crypto Hedge Fund Three Arrows Capital Pitched a GBTC Arbitrage Trade Before Rumored Collapse

June 22, 2022 Bitcoin.com

Ethereum risks another 60% drop after breaking below $1K to 18-month lows

June 18, 2022 Coin Telegraph

Ethereum risks another 60% drop after breaking below K to 18-month lows

Analysis

A 2018-like bearish cycle could have Ether drop toward $420 in the coming weeks.

The price of Ethereum's native token, Ether (ETH), careened below $1,000 on June 18 as the ongoing sell-off in the crypto market continued despite the weekend.

Ether reached $975, its lowest level since January 2021, losing 80% of its value from its record high in November 2021. The decline appeared amid concerns about the Federal Reserve's 75 basis points rate hike, a move that pushed both cryptocurrencies and stocks into a strong bear market.

"The Federal Reserve has barely started raising rates, and for the record, they haven't sold anything on their balance sheet either," noted Nick, an analyst at data resource Ecoinometrics, warnings that "there is bound to be more downside coming."

*ETH/USD weekly price chart. Source: TradingView*

Ethereum's implosion continues

Investors and traders have been anxiously watching Ether's price in recent days, fearing a decisive breakdown below $1,000 would trigger the forced liquidations of massively leveraged bets. In turn, that would put more downside pressure on Ethereum.

The fears appear due to Babel Finance and Celsius Network, a pair of crypto lending platforms that halted withdrawals citing market volatility.

They intensified further after Three Arrow Capital, a crypto hedge fund managing $10 billion worth of assets as of May, failed to shore up its collateral to cover pungent bets. This came less than a month after Terra, a $40 billion "algorithmic stablecoin" project, collapsed.

These events have coincided with a massive capital withdrawal from Ethereum's blockchain ecosystem. The total value locked (TLV) unwind occurred in two parts. First, Ethereum's TVL across DeFi projects fell by $94 billion after the Terra debacle in May and then by another $30 billion by mid-June.

*Ethereum total value locked in DeFi. Source: Glassnode*

"The deleveraging event that is underway is observably painful, and is akin to a form of mini-financial crisis," noted CheckMate and CryptoVizArt, a pair of analysts at Glassnode, an on-chain analytics platform, adding:

"However, with this pain comes the opportunity to flush excessive out leverage, and allow for a healthier rebuild on the other side."

How low can ETH price go?

Fed's hawkish policies and the ongoing DeFi market implosion suggest extended bearish moves in the Ether market.

From a technical perspective, ETH's price must regain $1,000 as its psychological support, which, if broken to the downside, could have the token eye the $830 as its next target. The same level served as resistance in February 2018, which preceded a 90% decline to around $80 in December 2018.

Meanwhile, as Cointelegraph covered earlier, ETH/USD can fall to as low as $420 if Ether's correction turns out to be anything like its 2018 bear cycle when the drawdown reached over 90%.

Interestingly, the $420-downside target was instrumental as support in April-July 2018 and resistance in August-September 2020.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

XRP price technical breakdown boosts chances of a 40% drop by July

June 17, 2022 Coin Telegraph

Altcoin

XRP's bearish outlook is driven by a mix of technical and fundamental factors that could see its price drop to $0.18 next.

Ripple (XRP) price stares at potential losses in the coming weeks as it breaks out of a "descending triangle" pattern, with its bias skewed toward the downside.

Major XRP breakdown underway

To recap, XRP started forming the technical structure after reaching $1.98 in April 2021, its second-highest level to date. In doing so, the token trended lower inside a range defined by a falling resistance trendline and a horizontal support trendline.

On May 16, 2022, XRP broke below the triangle's support trendline, accompanying a decent increase in trading volumes.

The move confirmed the descending triangle as a bearish reversal indicator. Meanwhile, as a rule of technical analysis, XRP now risks extending its downside move by as much as the triangle's maximum height when measured from the breakdown point, as shown below.

*XRP/USD weekly price chart featuring 'descending triangle' breakdown setup. Source: TradingView*

This could have XRP drop to $0.18 by July 2022, down nearly 40% from June 1's price.

Crypto carnage

XRP's bearish setup appears amid a broader selloff taking place across the crypto market, with some tokens now trading more than 90% below their record highs established last year.

The massive tailspin began in May after Terra (LUNA) — now known as Luna Classic (LUNC) — a $40-billion "algorithmic stablecoin" project, collapsed due to the failure of its staking system. This debacle found its match in Celsius Network, one of the largest crypto lending platforms, which unexpectedly paused crypto withdrawals in June over "extreme market conditions."

Since then, the crypto market has been facing one piece of bad news after another, from crypto fund giant Three Arrow Capital's potential insolvency owing to bad debts and risky trades to crypto lender Babel Finance halting withdrawals due to liquidity issues.

Babel Finance 也暂停了提现业务 pic.twitter.com/9Nk1gkEmVz
— 0xEdson | web3 (@0xEdsonCrypto) June 17, 2022

Macro risks also favor XRP's downside outlook with the Federal Reserve's 0.75% interest rate hike this June 15, ensuring lower liquidity for investors to speculate on risky assets.

Nonetheless, Kevin Cage, who runs Iron Key Capital, a crypto-focused hedge fund, says XRP will "survive" the bear market.

I know for a fact that no matter how hard it gets, $XRP will survive future bear markets.

XRPL is 10 years old. Tried & true.

Ripple expanding, new partners every week, hiring 300 more people

They want clarity and will fight until the end.

SEC chose the wrong company to fight
— Kevin Cage (@Kevin_Cage_) June 14, 2022

Meanwhile, Bleeding Crypto says that XRP could fall toward $0.17 but anticipates that the token would undergo a sharp rebound move after reaching the level.

"Looks like it may be going for a full reset of this past bull run," he wrote, hinting that XRP would reclaim $1.95–$1.98 during its next upside retracement.

NEXO price drops 40% in three days on rumors of ties to ‘insolvent’ crypto fund

June 15, 2022 Coin Telegraph

anchor protocol

Nexo says it currently has no exposure to Three Arrows Capital and has 100% liquidity to meet its debt obligations.

The price of Nexo (NEXO) continued to fall on June 15, as Nexo denied rumors of exposure to Three Arrows Capital (3AC), a Dubai-based crypto fund facing insolvency risks.

NEXO price suffers on DeFi contagion fears

NEXO, which serves as a security token at a cryptocurrency lending platform of the same name, fell nearly 25% to $0.61 a unit, its lowest price reading since January 2021.

The massive intraday decline came as a part of a broader downside move this week, which stretched NEXO's losses to 40%.

*NEXO/USDT weekly price chart. Source: TradingView*

An ongoing contagion in the crypto lending sector contributed to NEXO's underperformance.

Traders fear that most DeFi/CeFi firms, which offer high yields to clients on their cryptocurrency deposits, will default on their debts due to the wipeout of nearly $1.5 trillion from the crypto market in 2022.

The concerns continue to mount after the collapse of Terra, a $40 billion algorithmic stablecoin project, in May.

A month later, Celsius Network, which offers clients up to 18% yields, paused withdrawals due to “extreme market conditions.” Its clients have pulled almost half of their assets out of the platform since October 2021, thus leaving it about $12 billion as of May 17 to meet debt obligations.

I am definitely rooting for Celsius not to get liquidated. That is customer money. And fuck the funds who are hunting this stop loss. I hope they get rekt. #bitcoin
— Lark Davis (@TheCryptoLark) June 14, 2022

Meanwhile, 3AC, a crypto hedge fund, has witnessed liquidations of at least $400 million. In addition, on-chain data reveals that the firm may also have a minimum debt of $183 million against a collateral position of $235 million (derived in Staked Ether).

The address uses USDT/USDC to repay the debt and withdraws ETH, and then converts ETH to USDT/USDC through "sinofate.eth" and repays it, and so on. In almost 24 hours, the address has sold about 50kETH. https://t.co/TUzqXBXBwF
— Wu Blockchain (@WuBlockchain) June 15, 2022

The fund could transfer the economic risks to its lenders if it becomes insolvent.

"The lenders will bear the PnL [profit and loss] difference between how much they are owed versus what they get in liquidating their collateral," noted Degentrading, a market commentator known for highlighting the Celsius Network's liquidation issues.

He added:

"That means defaults will cause SIGNIFICANT EQUITY erosion [...] Not all lenders are made equal. Celsius is the worst. It has gone under. Nexo, I don't know. BlockFi is pretty bad as well."

However, Nexo says it currently has no exposure to 3AC despite partnering with the fund over a nonfungible token (NFT) lending product in December 2021. The firm asserts that the partnership with 3AC did not take off.

All Nexo has ever done with Three Arrows Capital is sign a partnership with their NFT fund, but it did not take off and we currently have $0 business and exposure with them.
— Nexo (@Nexo) June 15, 2022

What's next for the NEXO token?

Nexo has 100% liquidity to meet its $4.96 billion worth of debt obligations, according to U.S.-based audit firm Armanino. That raises the firm's potential to avoid a liquidity crisis in the event of a rising withdrawal rate, unlike Celsius.

Nonetheless, NEXO price treads ahead under persistent bearish risks, primarily due to the crypto market's dire state in a high interest rate environment. The NEXO/USD pair now eyes the $0.58-$0.69 range as its interim support due to its historical significance from December 2020-January 2021.

*NEXO/USD weekly price chart. Source: TradingView*

A rebound from the $0.58-0.69 range could have NEXO bulls eye $0.883 as their interim upside target. This level was instrumental as support during the early-May price crash; it now coincides with the 0.786 Fibonacci retracement graph drawn from the $0.11-swing low to the $3.71-swing high.

Conversely, a decline below the $0.58-$0.69 range could have NEXO watch December 2020's support level near $0.43, down around 35% from today's price.

Ethereum sell-off fears rise as crypto hedge fund moves $60M ETH to an exchange

May 30, 2022 Coin Telegraph

Ethereum sell-off fears rise as crypto hedge fund moves M ETH to an exchange

Coin Telegraph

Ether risks turning overbought on shorter timeframes, amounting to sell-offs also as it retests a critical resistance level.

Ethereum's native token Ether (ETH) rose by more than 5% to reach its intraday high above $1,930 on May 30. Nonetheless, the ETH/USD pair risks facing another sell-off round due to concerns about a massive ETH inflow into an exchange.

58.7K Ether transferred to FTX in May

On May 30, the Ether address allegedly associated with Three Arrow Capital — a Singapore-based crypto hedge fund, sent 32,000 ETH worth $60 million to the FTX crypto exchange within a span of an hour, on-chain data shows.

The bulk transfer, which follows the fund's 26,700 ETH deposit to the same exchange earlier in May, raised suspicions that it would dump the Ether stash. That is primarily because, in theory, investors transfer crypto to their exchange wallets only when they want to sell them for other assets.

dump eeth? https://t.co/7xdI80P8rZ
— Tim Copeland (@Timccopeland) May 30, 2022

Nonetheless, the number of Ether held by exchanges continued to drop in May, according to on-chain data tracked by Glassnode.

The ETH balance across all the crypto exchanges dropped from 20.45 million to 20.38 million month-to-date (MTD), underscoring that investors are holding their investments for the long term.

*Ethereum balance on exchanges. Source: Glassnode*

ETH rebound weakens

Three Arrow's massive Ether transfer to FTX coincides with ETH testing a critical support-turned-resistance level near $1,920 for a breakout, as shown below.

*ETH/USD four-hour price chart. Source: TradingView*

Simultaneously, Ether's relative strength index is near its "overbought" threshold of 70, which as a rule of technical analysis tends to precede a sell-off. In other words, ETH could consolidate around $1,920 in the coming days before pulling back to its rising trendline support near $1,850.

Conversely, a decisive move above the $1,920-level, accompanied by a rise in trading volumes, could trigger a long-term upside setup shared by "Wolf," a pseudonymous market analyst, as shown below.

*ETH/USD weekly price chart. Source: Wolf/TradingView*

The setup showcases the levels around $1,820 as support in a so-called accumulation range, with $4,000 serving as resistance on the other end. Wolf noted that the price could rally toward $4,000 "a few months from the Merge," a highly-awaited upgrade that would make Ethereum a proof-of-stake protocol.

Three Arrow Capital