Bitcoin Cautious as Crypto Hedge Fund Defaults on Loan

Crypto Collapse Hurts the Industry

The crypto market is still reeling from the recent rout, with FXCM's CryptoMajor Basket heading towards its third straight negative month, losing around 35% in June, at the time of writing.

This plunge in digital assets has rattled the industry, with Coinbase laying-off 18% of its workforce and warning of a potential new crypto winter, earlier in the month [1]. We also saw some firms, such as crypto lender Celsius, freezing withdrawals [2].

The price plunge continues to reverberate, as crypto hedge fund Three Arrows Capital (3AC) defaulted on a loan from Voyager Digital. The company said on Monday, that 3AC had failed to "make the required payments on its previously disclosed loan of 15,250 BTC and $350 million USDC". [3]

Continued Crypto Scrutiny

Digital assets have been under increasing regulatory scrutiny, while many high profile-speakers had harsh words in the aftermath of the recent sell-off, with the President of the European Central Bank being amongst them.

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Securities and Exchange Commission (SEC) Chair, Gary Gensler, told CNBC on Monday that Cryptocurrency is a "highly speculative asset class" and called for closer cooperation between the SEC, the CFTC and banking regulators. He also warned that many tokens are "potentially non-compliant" and referred only to Bitcoin as "commodity". [4]

BTC/USD Analysis

The BTC/USD sell-off continued during the current month, leading to a breach of the 20,000 mark for the first time since late-2020. The popular cryptocurrency is exposed to 17,566, although bears are likely to need fresh impetus for challenging it and looking towards 13,207.

On the other, BTC/USD has steadied since mid-June and so far defends the psychological 20K level and an effort towards 38.2% Fibonacci of the June High/Low drop (24,320) would not surprise us. However, we struggle to see at this point, what could lead to sustained recovery beyond this area that would bring the EMA200 (at around 26,800) in the spotlight.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 28 Jun 2022 https://blog.coinbase.com/a-message-from-coinbase-ceo-and-cofounder-brian-armstrong-578d76eedb12

2

Retrieved 28 Jun 2022 https://blog.celsius.network/a-memo-to-the-celsius-community-59532a06ecc6

3

Retrieved 28 Jun 2022 https://www.prnewswire.com/news-releases/voyager-digital-provides-market-update-301575492.html

4

Retrieved 13 Aug 2022 https://www.youtube.com/watch

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