Fundamentally and technically the entire crypto space is a huge mess


Ethereum fell below the stand. Let’s discuss much of the cryptocurrency space, including Bitcoin, Dogecoin, and supposedly 1: 1 bets on Ethereum.

Ethereum chart courtesy of StockCharts.Com Mish annotations

Liquidity-driven bubble

The same forces that have driven the stock market to insane levels are precisely the same forces that have driven the entire cryptographic space, even further.

ARKK Innovation Fund

ARK Innovation Fund chart courtesy of StockCharts.Com Mish annotations

The same forces that drive cryptography as actions

  • Three rounds of tax incentive with free money
  • Moratorium on evictions
  • $ 9 trillion in QE bringing interest rates to zero by 2020
  • The Fed continues QE until March 2022

In short, the explosion in the cryptographic space and the stock market was a liquidity-driven event.

Tune in to Fud

Here are some friendly tips on how to turn off what I just said.

Self-reinforced feedback loops

Duo Nine has a nice 13-string tweet thread complete with self-reinforcing feedback loops so you only hear what you already believe.

Following such advice is what led the MOON to zero. But Duo Nine removes everything conveniently so you only pay attention to what you like. And if you believe me, there are no MOONS lurking are the jewels that follow.

Ethereum monthly chart

Ethereum monthly chart courtesy of StockCharts.Com Mish annotations

Note that a collapse to 333 would only recover a year and a half of earnings.

Worst case 1000?

Questioning 1000

fxsoriginal

Can’t go to 100 ?!

fxsoriginal

How markets work

  • Markets are driven by liquidity and sentiment rather than profit
  • We had a liquidity bubble.
  • Just like in the DotCom bubble people believed essentially in what tulips were.
  • Everyone was convinced that his thing was immune.
  • The tide of low interest rates and QE has reversed
  • True believers will come down with the boat

Facts of the matter

  • The whole cryptocurrency space, started by Bitcoin in 2009, has only known round after round of low interest rates and QE.
  • The latest round of QE boosted the Fed’s balance sheet to $ 9 trillion
  • The latest round of rate cuts has brought the Fed Funds rate to zero
  • In addition to Fed-driven liquidity, we had three rounds of free money from Congress
  • The above elements have created a massive bubble in stocks, housing, and cryptographic space.

Bitcoin DeMark account

“The lowest weekly closing in 12 months for $ BTC #Bitcoin. Don’t worry because BTC is little more than a product of someone’s imagination, so the price may be whatever you want it to be. DeMark Accounts / Levels they’re horribly low on a daily basis and on a monthly basis, though they support a weekly rebound. “

I asked for DeMark’s accounts but got no response.

Instead, here are some graphics made by me.

Daily Bitcoin chart

Bitcoin monthly chart courtesy of StockCharts.Com Mish annotations

That’s an unusually tight range for Bitcoin. The question of the day is distribution or accumulation?

I will go with the latter because the whole cryptographic space is acting like this and the Fed is draining liquidity quickly.

Bitcoin monthly chart

Bitcoin monthly chart courtesy of StockCharts.Com Mish annotations

Technically speaking, there is no monthly support up to the 1000 level. And that would only take 1.5 years of earnings.

DogeCoin weekly chart

Dogecoin weekly chart courtesy of StockCharts.Com Mish annotations

Dogecoin is right in support. And if it fell back to where it was in early 2021, it would change for about a tenth of a cent or so.

Given that currency started out as a joke and doesn’t solve anything, why should anyone expect less?

Who sells?

Someone can’t buy unless someone else is throwing. Who is that?

Returning to Ethereum.

Staked Ethereum (stETH) could cause a cryptographic crash

Note that Staked Ethereum (stETH) could cause a cryptographic crash, here’s how

The token, which is supposed to be traded in a 1: 1 ratio for ETH, is currently trading at $ 1,513.14 and has fallen 10% in the last 24 hours. In comparison, ETH is trading at $ 1,582.

stETH has been declining since the last hour of Thursday, with the first wave of losses stemming from a massive $ 1.5 billion spill by Alameda Capital, one of stETH’s largest holders. Alameda sold all of its shares in the token.

stETH has no direct link to ETH pricing. It can only be exchanged for ETH after the merger takes effect, the date of which is currently unknown.

But the main role of the token as a guarantee in DeFi platforms such as AAVE and Lido could have serious implications for DeFi. Strong losses on stETH are also causing panic in sales on Ethereum.

Celsius, Lido could be trapped in the crossfire

But while stETH has minimal impact on ETH prices, its key role in leveraging ETH in DeFi could burn those with high exposure.

Currently, the DeFi Celsius platform has blocked many customer funds in stETH, which are susceptible to bailouts. If customers were frightened by the current slowdown in stETH, it could lead to a banking rush that would overload Celsius with bailouts, which could cause a liquidity crisis.

DeFi AAVE and Lido majors, which have large stakes in the token, could also see a liquidity crisis if stETH sales intensify.

Presumably stable

Here we go again. Another cryptography is linked to a second cryptography that is supposedly “stable.”

In this case, we have Celsius, STETH, AAVE, Lido and Ethereum in the mix.

I’ll let others try to explain how and why this isn’t a concern, but anyone who sees any charts should be concerned.

And that concern should be with or without a liquidity leak.

I have many other tweets that tell me why I’m wrong and why it’s different in what they believe.

Here’s a tweet that makes sense.

BTC is the definitive indicator of what I would call the frivolous industry. Influencers, professional gamers, bloggers and bloggers who make money without doing basically anything productive. It thrives when interest rates are zero and the economy has a wide range of workers.

Don’t worry

Everyone “knows” that what I just described can’t happen. I have great authority that a nuclear war would be needed for the crypts to return 1.5 years of profits.

It just can’t happen. Meanwhile, back to the real world, let’s talk about inflation.

Why did economists exploit the CPI forecast so badly this month?

Assuming you’ve gotten this far, which implies you’re not a cryptohead, consider Why did economists exploit the CPI forecast so badly this month?

Then consider what this may mean for overall liquidity.



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