The Tide Pulling Out
The Bloodbath
The bloodbath that has persisted for the better part of the past seven months continued this weekend, with the market shedding an additional $200 billion in total market cap, falling below the $1 trillion mark for the first time since late 2020. Yesterday was the single biggest decline for bitcoin (-16%) since March 2020. At the time of writing (early morning hours of June 14th), there have been a total of $1.2 billion in liquidations of leveraged positions in the futures market.
We are witnessing a combination of macro forces and over-leveraged positions in the market to result in the forced selling of BTC and ETH.
First, a couple of notes on the macro landscape.
Rates
On Monday, we saw the yield curve invert briefly, for the second time this year, as the 10Y-2Y went negative.
Meanwhile, the US10Y has climbed to above 3.3% for the first time in over a decade. This is a 560% increase in the 10Y rate since August 2020. When keeping in mind how rapidly rates have increased, it is no wonder that asset prices have tumbled so precipitously. Analysts around the globe are being forced to adjust their cash flow and credit risk models in response to the sudden reappearance of a cost of capital. Thus, risk assets are being repriced accordingly.
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