Rapture #215: Brutal Drawdown Continues

Rapture #215: Brutal Drawdown Continues

Recent market action continues to captivate me and the rest of the industry. Earlier today, BTC clearly broke $20,000, bottoming out at approximately $17,760 before rebounding to a current price of $19,000. For the first time ever, BTC has broken below the ATH set in a previous bull market. Interestingly, this breaking of $20,000 did not even come on high volume, which is worrying for those trying to pick a bottom. That being said, major traders, such as Tetranode, have announced that they are leaving crypto twitter. Influential traders typically do this once they confirm the market switch from bull to prolonged bear, as being a trader influencer type in a bear market is brutal, since many people blame them for their financial woes.

The sellers

So, who is selling at these levels?

Well, we know Celsius and 3AC are under serious duress and are likely continuing to liquidate various positions. Furthermore, BlockFi has been trying to raise capital to shore up their business but the capital markets have not been interested, meaning that BlockFi could be liquidating positions to shore up cash.

Furthermore, miners have moved coins to exchange at the most significant rate ever. When miners move coins to exchanges, I infer that they are likely looking to liquidate their positions.

Despite BTC and ETH getting absolutely crushed, altcoins have not overall underperformed, indicating to me that the sellers in this market environment are of the institutional variety. We could very well be in the midst of an institutional capitulation, though how long it takes to play out is hard to tell. While everyone on Twitter is screaming contagion, we still have no idea what other counterparties are being affected by the 3AC and Celsius implosions so it is impossible to gauge how many more dominos will fall.

My take

I have seen many crypto OGs, such as Nic Carter and Barry Silbert, publicly announce that they are buyers at these levels. While I commend them for their bravery, I am opting not to follow in their footsteps at this time.

Since I have no way to gauge how badly the domino effect of imploding crypto institutions will be and also don't think the macro environment improves in the coming days, I still don't think we are at a bottom. Nothing in terms of the volume charts indicate a capitulation event as well. The risk to the downside, especially in such a low liquidity environment, is still too high for me to justify redeploying capital.

That being said, there are some events on the horizon that could change my thinking. Specifically, if June's inflation numbers fall below expectations/are lower than 8.6%, that could be a good time for at least a short term relief rally. Those numbers will be released on July 13th.

Undoubtedly, the next 3 - 6 months will be when the kings of the next bull market are likely made. I absolutely do have conviction that crypto will surpass its ATHs again, and thus am extremely excited about the opportunity of having yet another shot at massive exponential upside.


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