It’s been a scary last two weeks in crypto markets. 

We’ve seen crypto come under criticism from the billionaire Elon Musk, the Chinese national government, and now even top religious institutions with comments form the Pope. 

As a result we’ve seen normal mid market cycle selling pressure intensify to cause leveraged liquidations, a cascade of forced selling, lots of fear and capitulation with Bitcoin now down ~50% from its all time high. 

With this much pain on the tape in such a short time, we have to start re-underwriting our thesis on crypto and asking ourselves – how much of what’s happened fundamentally changes our thesis and outlook vs. how much of it is a market reaction that’s caused assets worth $2 until recently to be worth $1 today. 

We’ll be discussing the fundamentals more in the coming weeks, but for now we think some things have changed but still think the long term thesis remains largely the same as it was two weeks ago. 

Focusing on the market mechanics – it seems like crypto is at a point where forced sellers have been dominating the market. Here’s a good thread of info from the CEO of the crypto exchange FTX discussing how far we’ve come in terms of liquidated futures positions: 


Are forced liquidations nearing an end?
Are forced liquidations nearing an end?
Are forced liquidations nearing an end?
Are forced liquidations nearing an end?


Source: https://twitter.com/sbf_alameda/status/1396484674306723840?s=21


The shorter term question I’m asking is could we see a bounce on forced seller exhaustion?

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