Basically And Technically The Whole Crypto Space Is A Huge Mess

Basically And Technically The Whole Crypto Space Is A Huge Mess

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Ethereum crashed below support. Discussions of much of the crypto space, including Bitcoin, Dogecoin, and coins that would have been staked 1:1 on Ethereum.

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Ethereum chart courtesy of StockCharts.Com annotations by Mish

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Optimized bubble on liquidity

The same forces that have driven the stock market to insane levels are precisely the same forces that have propelled the entire crypto space, even more.

ARKK Innovation Fund

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ARK Innovation Fund chart courtesy of StockCharts.Com annotations by Mish

Same Crypto Driving Forces as Stocks

  • Three rounds of fiscal stimulus with free money
  • Eviction moratorium
  • $9 trillion of QE bringing the interest rate down to zero in 2020
  • The Fed continues its QE until March 2022

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

Eliminate the Fud

Here are some friendly tips on how to sort out what I just said.

Self-reinforcing data loops

Duo Nine has a nice 13-channel Tweet feed with self-reinforcing stream loops so you only hear what you already believe.

Following such advice is what drove LUNA to zero. But Duo Nine eliminates everything for you so that you only pay attention to what it likes. And if you believe him, there is no LUNA hiding, it is the joys he follows.

Ethereum monthly chart

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Ethereum monthly chart courtesy of StockCharts.Com annotations by Mish

Please note that a crash to 333 would only bring back a year and a half of gains.

Worst case 1000? !

Interrogator 1000

fxsoriginal

Can’t go to 100? !

fxsoriginal

How Markets Work

  • Markets are driven more by liquidity and sentiment than earnings
  • We have a liquidity bubble.
  • Just like in the DotCom bubble, people basically believed in what tulips were.
  • Everyone was convinced that their thing was immune.
  • The tide of low interest rates and QE has turned
  • True believers will sink with the ship

Facts of the matter

  • The entire crypto space, launched by Bitcoin in 2009, has only seen a series of low interest rate and QE rounds.
  • The latest round of QE propelled the Fed’s balance sheet to $9 trillion
  • The latest round of rate cuts drove the Fed Funds rate to zero
  • In addition to cash issued by the Fed, we got three rounds of free money from Congress.
  • The above elements have created a massive bubble in stocks, housing, and the crypto space.

Bitcoin DeMark Account

“The lowest weekly close in the last 12 months for $BTC #Bitcoin. Don’t worry because BTC might just be a figment of someone’s imagination, so the price can be whatever one would like it to be. DeMark count/levels are horribly bearish daily and monthly, while supporting a weekly bounce.

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

Instead, here are some graphics from me.

Bitcoin daily chart

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Bitcoin monthly chart courtesy of StockCharts.Com annotations by Mish

This is an unusually tight range for Bitcoin. The question of the day is Distribution or Accumulation?

I will go for the latter because the whole crypto space is acting this way and the Fed is draining cash fast.

Bitcoin monthly chart

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Bitcoin monthly chart courtesy of StockCharts.Com annotations by Mish

Technically speaking, there is no monthly support up to the 1000 level. And it only works to take away 1.5 years of gains.

DogeCoin Weekly Chart

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Dogecoin Weekly Chart courtesy of StockCharts.Com annotations by Mish

Dogecoin a reason on the support. And if it fell back to where it was at the start of 2021, it would be trading for about a tenth of a cent or so.

Given that the piece was introduced as a joke and resolves nothing, why should anyone expect anything less?

Who sell ?

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Someone can’t buy unless someone else is dumping. Who is this ?

Back to Ethereum.

Staked Ethereum (stETH) Could Cause Crypto Crash

Please consider that Staked Ethereum (stETH) could cause a crypto crash, here is a comment

The token, which is supposed to redeem at a rate of 1:1 against ETH, is currently trading at $1,513.14 and has fallen 10% in the past 24 hours. In comparison, ETH is trading at $1,582.

stETH has been unpegged since Thursday night, with the first wave of losses resulting from a huge dump of $1.5 billion by Alameda Capital, one of the largest holders of stETH. Alameda has sold all of its holdings of the token.

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

But the token’s primary role as collateral on DeFi platforms such as AAVE and Lido could have dire implications for DeFi. Heavy losses in stETH also cause panic selling in Ethereum.

Celsius, the Lido could be caught in the crossfire

But even if stETH has minimal impact on the price of ETH, its key role in mining ETH on DeFi could burn those with high exposure.

Currently, the DeFi platform Celsius has many client funds locked in stETH, which are subject to redemptions. If customers were to be spooked by the current downturn in stETH, it could cause a bank run that would overload Celsius with redemptions, potentially leading to a liquidity crunch.

DeFi majors AAVE and Lido, which hold large amounts of tokens, could also experience a liquidity crunch if stETH selling intensifies.

Supposedly stable

Here we go again. Another crypto is linked to a second crypto that is allegedly “stable”.

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

I’ll let others try to explain commenting and why it’s nothing to worry about, but could consider any chart should be worried.

And that concern should be with or without a cash drain.

I have countless other Tweets all telling me why I’m wrong and why everything they believe is different.

Here’s a Tweet that makes sense.

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BTC is the ultimate indicator of what I would call the frivolous industry. Influencers, pro gamers, bloggers, and money-making bloggers hardly do anything productive. It has thrived when interest rates are zero and the economy has an abundant supply of workers.

Do not worry

Everyone “knows” that what I have just described cannot happen. I have great authority that it would take nuclear war for cryptos to return 1.5 years of earnings.

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

Why did economists blow up the CPI economists so badly this month?

Assuming you’ve gotten this far, implying you’re not a cryptohead, please consider

Then think about what this might mean for overall liquidity.

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