- Crypto markets are trading 2.3% higher over the last 24 hours, with BTC and ETH 1.61% changing hands at $21.8k (+4.5%) and $1.23k (+1.0%), respectively. Alternate Layer-1s have been relatively flat during the same period, with BNB, SOL 4.12% , and AVAX at $242 (+0.5%), $38.6 (+1.3%) and $20.4 (+2.2%). Traditional markets have also opened slightly higher with NDAQ and SPX trading at $157 (+0.3%) and $3.92k (+0.4%). This can be attributed to the strong nonfarm payroll print of 372k (vs consensus of 250k) and a steady unemployment rate of 3.6%, defying recessionary fears on the street. Nevertheless, continued crypto contagion makes it difficult to call for a definitive bottom. Yesterday, troubled lender Celsius sent de-leveraged their MakerDAO positions and sent $500m of wBTC to FTX, presumably to make good on creditor demands. Tether said that it liquidated a BTC-denominated loan to Celsius 'without a loss', despite announcing that it did not have any exposure to Celsius last month. Crypto.com also revealed that it stands to lose $270m from lending to now-defunct Three Arrows Capital.
- Yesterday, famed DeFi account @0x_b1 self-doxxed as Jason Stone sued troubled lending platform Celsius for negligence towards users' funds and owing money to Jason's firm, KeyFi. In his filing to the NY State court, Jason accused Celsius of running a Ponzi scheme, using lucrative interest rates to lure new depositors to meet withdrawal requests. Between Aug '20 and Apr '21, KeyFi used Celsius' customer deposits to deploy numerous sophisticated DeFi strategies for the lending platform, managing ~$2b assets at its peak. While Celsius agreed to monitor and manage risk on behalf of KeyFi's strategies, they failed to do so - effectively, Celsius had naked exposure to fluctuations in digital asset prices. As of yesterday, Celsius fully repaid its MakerDAO loan and sent $450m in wBTC collateral to FTX. It still has $480m in stETH collateral on Aave, with insufficient on-chain liquidity on Curve for it to fully exit its position. As such, it would need to seek quotes from OTC desks that are willing to undertake this liquidity risk. With the ETH merge on the horizon, this may pose an attractive opportunity for well-capitalized desks to step in and profit.
- Marathon Digital announced that it sold no bitcoin in Q2 and has not sold since Oct '22. This is despite 'operational obstacles' including maintenance issues and a severe storm at its facility in Montana. For context, the company mined 707 BTC during Q2, down from the 1,259 BTC mined in Q1. It currently holds a total of 10,055 BTC at a fair market value of just below $200 million. Conversely, competitor Core Scientific announced the sale of 78.6% of the firm's BTC holdings (7,202 BTC) in June at an approximate price of $23,000. The company now holds 1,959 BTC and $132M in cash. We have alluded to Bitcoin miners being leveraged plays on Bitcoin in the past, given their playbook of fundraising in debt capital markets to fund operations or buy more ASICS to mine BTC. These loans were often collateralized by the ASIC machines themselves, which have depreciated significantly since the market downturn. Given miners' existing leverage in the markets and the need to fund operations, there is a plausible scenario for altcoins to outperform BTC in the near term should more selling pressure come online.
Crypto Daily Report – July 8
Jul 8, 2022
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