Margin Accounts Liquidated and Crypto Freefall continues

By I-HODL | A Crypto Journey | 12 May 2022


It's another sober day today, friends.  I tried to steer clear of Twitter for much of it. It was disheartening logging on today because the humor and self confidence that you would usually see when markets dip just wasn't there today. In fact, when I logged on to Twitter this morning, this is what I saw. 

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And so, my friends, I usually end my posts with a reminder to everyone to take care and be safe, but today I'm going to open with this. 

I'm relatively new to crypto, so I've never lived through a real bear season, this is my first. But if you look at the charts historically, Bitcoin and other cryptocurrencies have been through it over the years. There have been dizzying highs and overwhelming lows.

When you step back and take a macro view, you definitely see the growth over the years, but cryptocurrency trading is not simply described as volatile because people want to be alarmist.

You have to prepare for unforeseen circumstances on even the best projects you feel most confident about. And so my friends, I'm not gonna be preachy about it because, believe me, I'm right there alongside you, anxious for this tumble to end, but it's just a note of caution, okay?

While the lure of becoming rich overnight because of a pump is really, really, really tempting, please don't move all the chips on the table. I am not qualified to give investment advice, not by a long shot, but I still try to urge readers to only put forward that which you are prepared to lose. 

Okay, friends, so for a look at developments today:

  • Crypto prices continued in freefall.
  • Some analysts are projecting that the bottom is not yet near.
  • Some are predicting that Terra's collapse could spell the end for algorithmic stablecoins.
  • SEC Chairman Gary Gensler is warning that crypto exchanges are betting against their clients.
  • And in a bit of relatively good news, which is so hard to come by these days, Latin America's largest bank, Nubank, is stepping up its crypto-investment services.

Let's discuss.

Crypto Prices Continue Freefall

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Image Source: Pixabay

  • Bitcoin traded below $29,000 today, as the overall market trended lower.
  • Terra's LUNA and Fantom's FTM were the biggest losers today with losses of approximately 94% and 43% respectively, recorded over the past 24 hours.

According to CryptoPotato, nearly 300,000 traders have been liquidated to date because of the current run, with losses amounting to approximately 700 million dollars.

And while some investors see opportunity and are stacking coins, caution is still advised as some investors are still projecting dark days ahead.

According to a strategy report published by the Huobi Research Institute, Is Another Black May Coming,  the team looked at recent developments and  credited the US Federal Reserve's recent monetary policy to raise interest rates as the main reason for the selloff, explaining that this hike  led to a liquidity crunch.

The report noted, "There is a possibility that the policy will continue on its hike, triggering market concerns. A large amount of BTC has recently moved to exchanges, constituting a concentrated selloff. The de-peg of UST has forced LFG to use reserve BTC, which may continue to amplify the selloff. The NFT market is also falling and no hedge against the fall in ETH is in sight."

Are Exchanges Betting Against You?

The Chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, seems to think so, at least according to an article published by Bloomberg.

In the report, the SEC Chair expressed concern for the possible commingling of funds on exchanges,  and said, "They’re trading against their customers often because they’re market-marking against their customers.”

He also accused the cryptocurrency exchanges of finding loopholes to avoid anti-money laundering (AML) and know your customer  (KYC) requirements, pointing out that the three largest stablecoins- USDT, USDC, and BUSD -are all owned by cryptocurrency exchanges, Bitfinex, Coinbase and Binance respectively.

“Each one of the three big ones were founded by the trading platforms to facilitate trading on those platforms and potentially avoid AML and KYC," he said.

Binance has responded in a blog post on its website, reassuring investors of the stability of the BUSD which it says is backed by independently attested fiat reserves.

"By adhering to strict guidelines and remaining transparent with the user community, BUSD continues to meet user expectations through the recent climate of de-pegging events," Binance stated. "Unlike algorithmic stablecoins, BUSD offers a transparent product that verifies, protects, and ensures the reserves, effectively maintaining its US dollar peg. That’s not true of all stablecoins available on the market." 

Nubank Steps up Crypto-Investment Services

Brazilian digital bank, Nubank, is partnering with financial technology company, Paxos Trust Company, to offer customers the opportunity to invest in cryptocurrencies directly through the bank. Nubank reportedly has more than 50 million customers, and through this deal, the clients of the bank can now buy and sell crypto with Brazilian reals. This represents another major step in Brazil's crypto adoption growth.

 

And so, my friends, as we continue to navigate through these turbulent waters, I've got a question for you. When this moment passes, as I believe it will, where will you be? Do you think that this is more turbulence than you can stomach, or will you take learnings from this moment to forge ahead? And as crypto projects continue to jostle each other in that great tumble downhill, which ones do you think will emerge triumphant when the markets once again turn green? I'd love to hear your thoughts.

Well, my friends, I'm off again, hoping to bring you better news tomorrow. In the meantime, remember, as this guy says:

Please stay safe. We'll chat again soon.

 

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I-HODL
I-HODL

Navigating the ebbs and flows of crypto trading, and writing about it.


A Crypto Journey
A Crypto Journey

There's nothing more exhilarating than navigating the ebbs and flows of crypto trading. I have sea legs today, but truth be told, I've been lost at sea more than I care to remember and I have weathered quite a few storms as a trader. But the crypto-verse has also rewarded my resilience, and so after every dip, I get right back to sailing in pursuit of me buried treasure. I love this digital evolution and am proud to be a part of it. These are the tales of a crypto adventure! 

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