Falling like Dominoes

The Crypto dominoes started falling with TerraUSD and LUNA collapsing (recall they lost $60B in market value) very rapidly. Which started w/ Do Kwan removed huge amount of liquidity from Terra a couple weeks prior to the implosion and collapse of LUNA.  Which put pressure on the entire Crypto market which in turn put pressure on the entire system.  In bubbles, its almost worth the crash to see who is bluffing and who are scammers and of course who is legit.

• LUNA 2.0 was thought-up, released and quickly hammered down as people fled with their new tokens.
• Celsius - was already on peoples avoid list due to their manic behavior in/around staking rewards and then they halted all withdrawals. In my mind also played a significant part in the ensuing market decline!  Why is this important? Celsius is one of the cryptocurrency industry’s biggest lenders! and users were not able to access their funds, nor make withdrawals 
• Three Arrows Capital (3AC) which is a Crypto Hedge Fund suffered heavy losses from LUNA (recall they had invested $200M in LUNA; ouch) is exploring selling assets and margin calls from all over the place.  Bitmex and Deribit liquidated their 3AC positions and 3AC is selling its own assets and might be seeking to put itself up for sale. 
• Another leg down in crypto markets overall market valuation below $1T (after taking a 15% to 25% beating in the previous 24 hours)
• Now Hong Kong Based Babel Finance on Friday 06/17/22 suspended redemptions and withdrawals, citing "unusual liquidity pressures,
• Finblox which has 3AC as an investor has paused all reward distributions, increased withdrawal limits and disabled new account creations!

Additionally, the following was observed

• BTC rapidly broke down from $30K to $20K then it broke thru $20K resistance level a key psychological level
  • BTC:NASDAQ correlation was running about 80% prior to the last 3-weeks, now that has broken down to about 50% - which could be a positive with all this dour information
• ETH broke through $1000 which was also a crucial psychological level all the way down to $884 before modest rise
• Putting Pressure on El Salvador and their BTC Bonds, will they have the resolve to stay the course or will they pivot?
• Coinbase laid off 1,100 employees 
• Solend a dAPP (largest lending market) on Solana blockchain is about to liquidate $170M SOL - could it cause SOL to go to zero?  (recall SOL is already down 86% from peak) 
• Since Nov. '21 the crypto market has lost $2T in value, I checked my pants pockets and it's not in them. 

What happens next? Wondering will institutions be forced to come to the rescue of their struggling peers? And to what end? Will the whales have to all come out in unison publicly stating the 'bottom is in' to provide a shot of confidence to the markets which includes the crypto large caps (BTC & ETH). 

More drama? You can count on more drama, some might even scare you to the point you wonder what will survive.  In the event that Celsius breaks down and enter bankruptcy we all need to buckle up and it could trigger several bad scenarios. At the end of this bear market you will look back and be like wow, the carnage and then see the shiny horizon coming up. That will be a spectacular day for certain. Personally, I am still bullish on this entire space for the next 5-10years...no way I can understand anything beyond that. 

What we don't want to see - shattered Crypto market confidence, then all hell breaks loose, everything falling like a knife off a counter. 

Lessons from Bear markets

• Learn as much about these bad behaviors and share them with those just coming into the space. You are now a veteran you can share your scars with them so everyone understands these are cycles within cycles. 
• Margin calls and liquidity issues 
  • some of these were due to Daisy-Chained Margin Calls Contagion Sparks Record Selling - yeah this crap must stop for certain
• Too much leverage - across the board 
• Impaired collateral 
• Cascading liquidations 
• Gating and blocking user redemptions or simply liquidating techniques by exchanges and
• All around bad actors - FBI warns of Crypto scammers being heavily active on LinkedIn 
• Chaos from lack of true decentralization (think Solana wanting to take over Whale Wallet and selling tokens in OTC) 

These all combine to an unnatural sell-off event. Make me wonder the following:

• How long will it take for the industry to settle down? 
• How many other firms need to rebalance their portfolios after this HUGE sell-off? (I.E. force sell outside their designed sell plans to avoid insolvency issues.

Summary - falling prices, failing firms, more drama; check.  Keep your head about you and monitor, but don't get weighed down over the market. Know where your entry and exits are... we have entered the waiting period.  I am just pointing out the cascading impact of these major crypto events, I don't believe this is the end of the cycle. Sure we will see bursts up and down prior to the end of this cycle.

Disclaimer - no way near financial advice, not a financial advisor, not even a book keeper. Just pointing out some of the trees in the forest!