While the previous session had a clear risk-on tilt, yesterday traded with a clear risk-off feel. With developments on the covid delta variant and investors fearing a more real impact on the economy, equity indexes in the US, in Europe and in Asia pulled back from elevated levels. Historically speaking, we’re still at very good levels, but, on the session, it felt a bit like a cold shower.

The feeling was also definitely shared in the crypto space. Yesterday, with massive holders of BTC and other crypto currencies dumping on retail starting to FOMO, a massive amount of leveraged longs got “rekt”, I’m talking more than $4 billion worth.

From the intraday high to intraday low, BTC fell a good 18% and then closed the session about 10% down, at $46,500. The BTC dominance is staying put during the move, suggesting alts are coping as well, or maybe a better phrasing is doing as bad but not worse as BTC.

Among the worst performers, we’re seeing THETA down 25%, DOT down 20%, MATIC and VET down almost 20% and also AAVE and TERRA, down almost 15%.

The question naturally is: what happened. I’m personally always looking at traditional markets for a hint at what large players are doing. There is a correlation whether we like it or not. With a lot of leveraged longs feeling optimistic about the mid 50Ks or even maybe the 60Ks, a small pullback can -and probably did- create a cascading effect of liquidation, which always is behind those violent corrections.

Some friends highlight the roll-out of the BTC as legal tender, in El Salvador. Maybe some people expected fireworks and a massive enthusiasm, or maybe smart money took advantage of an army of smaller investors buying in. But, the reality is still interesting there. McDonalds, for example, has to accept BTC there and so at least accepted its first BTC transaction, which they can then hold as BTC or convert into USD.

A very interesting news that came up and might also constrain prices is the post by Coinbase addressed to the SEC. Apparently, the latter is about to pursue legal action against Coinbase’ lending business, even though Coinbase has -apparently- always been ready to communicate and adapt its business model. Let’s see if this will end well or badly.

On a last note: what am I doing at these levels. Just holding. Fundamentals and interest in crypto hasn’t waned, it seems, and those dramatic moves will shake some players but shouldn’t take us of course for now.

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