Basically and technically, the whole crypto space is a huge mess

Ethereum crashed during support. Discussions about much of the crypto space, including Bitcoin, Dogecoin, and coins that were allegedly bet 1: 1 on Ethereum.

Ethereum chart courtesy of StockCharts.Com Annotations by Mish



Optimized bubble on liquidity

The same forces that have driven the stock market to insane levels are exactly the same forces that have driven the entire cryptocurrency space even more.

ARKK Innovation Fund

Mike 2 637906775252563142

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

Same crypto-drivers as stocks

  • Three rounds of fiscal stimulus with free money
  • Postponement moratorium
  • $ 9 trillion of QE, bringing interest rates down to zero by 2020
  • The Fed will continue its QE until March 2022

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

Eliminate Food

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

Self-amplifying data loops

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

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

Ethereum monthly chart

Mike 4 637906775519787965

Ethereum monthly chart courtesy of StockCharts.Com Annotations of Mish

Please note that a crash to 333 will only bring back one and a half year gains.

Worst case 1000? !

Interrogator 1000

fx original

Can not go to 100? !

fx original

How markets work

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

Facts about the case

  • The entire crypto area, launched by Bitcoin in 2009, has only seen a series of low-interest and QE rounds.
  • The latest round of QE drove the Fed’s balance sheet to $ 9 trillion
  • The latest round of interest rate cuts brought the Fed Funds rate to zero
  • In addition to cash issued by the Fed, we received 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 fictitious fantasy, so the price can be whatever you want it to be. DeMark numbers / levels are awful bearish daily and monthly while supporting a weekly bounce.

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

Instead, here’s some graphics from me.

Bitcoin daily chart

Mike 9 637906778048036971

Bitcoin monthly chart courtesy of StockCharts.Com Annotations of Mish

This is an unusually tight range for Bitcoin. Today’s question is Distribution or Accumulation?

I will go for the latter because the whole crypto area is behaving this way and the Fed is draining money fast.

Bitcoin monthly chart

Mike 10 637906778213047032

Bitcoin monthly chart courtesy of StockCharts.Com Annotations of Mish

Technically, there is no monthly support up to the 1000 level. And that only works to eliminate 1.5 year gains.

DogeCoin weekly chart

Mike 11 637906778361471401

Dogecoin ugediagram courtesy of StockCharts.Com Annotations of Mish

Dogecoin a reason for the support. And if it fell back to where it was in early 2021, it would trade for about a tenth of a cent or so.

Considering that the play was introduced as a joke and does not solve anything, why should anyone then expect anything less?

Who sells?

Mike 12 637906778483106416

Someone can not buy unless another dumps. Who is it ?

Back to Ethereum.

Inserted Ethereum (stETH) can cause cryptocurrencies

Please consider that staked Ethereum (stETH) may cause a cryptocurrency, here is a comment

The token, which is expected to be redeemed at a 1: 1 rate against ETH, is currently trading at $ 1,513.14 and has fallen 10% in the last 24 hours. By comparison, ETH is trading at $ 1,582.

stETH has been unbound since Thursday night, with the first wave of losses due to a huge $ 1.5 billion dump from Alameda Capital, one of the largest owners of stETH. Alameda has sold all 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 security on DeFi platforms like AAVE and Lido can have serious consequences for DeFi. Major losses in stETH are also causing panic sales in Ethereum.

Celsius, Lido could be caught in the crossfire

But even though stETH has minimal impact on the price of ETH, its key role in mining ETH on DeFi can burn them with high exposure.

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

DeFi majors AAVE and Lido, which have large amounts of tokens, may also experience a liquidity squeeze if stETH sales intensify.

Apparently stable

Here we go again. Another crypto is linked to another crypto that is supposedly “stable”.

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

I will let others try to explain comments and why it is nothing to worry about, but could consider that any chart should be concerned.

And that concern should be with or without cash drains.

I have countless other tweets that all tell me why I am wrong and why everything they believe in is different.

Here’s a tweet that makes sense.

Mike 13 637906778653285016

BTC is the ultimate indicator of what I would call the junk industry. Influencers, pro gamers, bloggers and money-making bloggers do almost nothing productive. It has thrived when interest rates are zero and the economy has an ample supply of workers.

do not worry

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

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

Why did economists blow up CPI economists so violently this month?

If you assume you have come this far, which suggests you are not a cryptohead, consider

Then think about what it might mean for total liquidity.

Leave a Comment