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Second-Largest DeFi Liquidation Day Sees $24 Million Lost

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Well, it eventually happened. The 22nd of February marks a crypto DeFi market crash. In fact, the crash itself has caused enough liquidations to rank it the second-highest liquidation event within the DeFi space’s history. Within just 24 hours, $24.1 million in loans were liquidated.

Compound Accounting For 60% Of Liquidations

DeBank, one of the many crypto data aggregators out there, revealed that the majority of these losses, $13.7 million, comes from Compound, constituting almost 60% of the entire market crash. The only one being close to those losses is Aave, which saw a relatively small loss of $5.4 million in liquidations.

The only other liquidation event larger than this one, and that’s by more than three times, occurred back on the 26th of November, 2020. That crash, in particular, was thanks to the DAI suddenly and spectacularly increasing in price, which caused a whopping $93 million worth of margin calls.

On Coinbase Pro alone, DAI recorded a whopping 30% increase. This, in turn, caused over $88 million in crypto loans to be liquidated within the protocol itself.

Every Factor Worsened The Event

Another important metric measured by DeBank was the total value locked (TVL) within the crypto space. According to the crypto aggregator, this saw a significant drop from $44.5 billion to $38.8 billion within just 24 hours, amounting to a decrease of 12.8%.

The only other time the DeFi markets managed to lose more in terms of percentage was back in January, when the DeFi market shed caused a decrease of 15.4% in TVL.

DeFi

Another compounding factor comes from the Ethereum mainnet itself, primarily its staggering gas fees. Merchants are now reporting a total price tag of $30 just to enact a transaction of any kind. As one would imagine, that doesn’t really encourage small-scale operations.

Couple this with crypto traders being in a constant state of bidding war just to ensure that their transactions are pulled through, alongside tumbling token prices and massive network congestion, it’s easy to see why some traders couldn’t manage to close their positions in time.

Kraken In A Bit Of A Pickle

As is always the case in these matters, the ones most affected by this spectacular DeFi crash are the margin traders and DeFi users. Kraken, in particular, is having a rough time of it, as mass liquidations shot the price down to as little as $700 while it was trading at the $1,400 range on various other exchanges. Needless to say, more than a few customers have voiced their opinions that compensation must be given.

All those major corporations that invested so heavily into Bitcoin also saw multi-million USD worth of losses as they managed to buy at the peak just to see their assets tumble down in value. The 22nd of February saw $9,000 wiped out of a single Bitcoin’s value, reminding everyone just how insane the crypto market can be once you get too comfortable with it.

Second-Largest DeFi Liquidation Day Sees $24 Million Lost

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UK firm launches service for company treasuries to invest in Bitcoin

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BCB Group, a global digital financial services firm, is planning to help corporations navigate cryptocurrencies like Bitcoin (BTC) by launching a dedicated service.

According to a Feb. 19 announcement, BCB Group has launched BCB Treasury, a new service designed for corporate treasury departments seeking to get involved in Bitcoin à la Tesla. 

The new service aims to provide a specific solution enabling access to treasury management for companies willing to invest their capital into Bitcoin and other digital assets. With BCB Treasury, executives can enter, hold, manage, and report on a Bitcoin-focused treasury strategy, the announcement states.

BCB Group founder and CEO Oliver von Landsberg-Sadie said that the launch of BCB Treasury comes in response to growing demand triggered by the recent Bitcoin moves of companies like MicroStrategy and Tesla. The exec said that lots of companies are looking to invest in crypto to hedge against weak fiat currencies:

“We are seeing some powerful signals attracting companies to the digital asset space including the debasement of reserve currencies through unprecedented levels of central bank money supply.”

Last year, BCB Group’s core business BCB Payments received regulatory approval from the United Kingdom’s Financial Conduct Authority.

Headquartered in London, BCB Group is a major European crypto payment services provider, serving some of the world’s largest crypto companies like Coinbase, Gemini, Galaxy Digital, Bitstamp and Kraken. In early February, the firm appointed former Coinbase UK CEO Zeeshan Feroz as an advisor.

UK firm launches service for company treasuries to invest in Bitcoin

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Crypto Exchanges Face Outages as Bitcoin moves to fresh highs

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A fresh high for Bitcoin has left cryptocurrency exchanges crippled again. The sudden surge in Bitcoin prices, followed by a rise in volumes worked like a DDoS attack on some exchanges, causing them to have outages and connectivity issues.

Top exchanges struggle with the demand

Tesla recently announced that it has invested $1.5 billion in Bitcoin because of which traders jumped to the Bitcoin bandwagon yet again. The largest cryptocurrency in the world posted $5,600 in gains in a single day and touched almost $45,000, reaching new all-time highs. The sudden rise in transaction volumes stunned the systems of many crypto exchanges. Both volume and price of Bitcoin kept increasing which worked like a DDoS attack on the systems.

Crypto Exchanges Face Outages as Bitcoin moves to fresh highs

Top exchanges like Binance, Coinbase, Kraken, and Gemini faced connectivity issues. The support pages of all companies filed incident reports and talked about technical issues on their platform. Binance suspended withdrawals briefly while Kraken temporarily suspended new account onboarding. Both the platforms announced that they have now resolved their problems and released a fix.

Bitcoin’s gain is exchange’s loss

In 2020, the stay-at-home orders led to increasing in trading figures across equities, indices, and even digital currencies. The crypto market was specifically affected because of the increasing institutional activity in the region. Top institutional investors like MicroStrategy revealed multi-billion-dollar investments in Bitcoin which led to an unprecedented price rise towards the end of 2020 and early 2021.

During this time, Bitcoin’s price reached double its previous all-time highs of $20,000. The coin gained about 20% because of the Tesla investment alone, suggesting faith in the company’s decision to back the coin. Cryptocurrency exchanges have faced several unexpected and sudden surges in trading volumes in the past year, which has made outages very common.

Users are complaining about not being able to log into their accounts or facing slow connectivity during peak volumes which makes them miss out on profits.

Crypto Exchanges Face Outages as Bitcoin moves to fresh highs

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Bitfinex Finally Completes Loan Repayment To Sister Firm Tether

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Crypto exchange Bitfinex said it has finally repaid the $550 million loan to Tether, the issuer of the Tether (USDT) stablecoin.

In 2018, Tether lent the exchange over $600 million, both of which have the same ownership and executives. However, the transaction wasn’t made public until a year later after the report by New York Attorney General’s Office (NYAG). The report alleged that Bitfinex is secretly using Tether’s reserve to cover the $850 million loss suffered from a deal with Crypto Capital Corp.

But Bitfinex came out to clear the air and stated an initial payment has already been made to clear the loan.

According to Bitfinex’s website, the line of credit opened by Tether has been canceled after Bitfinex met the remaining loan payment requirement. The final repayment was made last month, according to the official statement.

Repayment has added more weight to Tether

According to Stuart Hoegner, Tether’s general counsel, Tether’s USDT’s stablecoin was 74% backed by fiat currencies as of April 2019.  He said this was due to the loan given to Bitfinex to cover lost funds. However, Deltec, Tether’s Bahamas-based bank, stated that the Tether (USDT) stablecoin is fully supported by reserve, which is what is in circulation.

Coinbase Looking To Land Killing Blow on Tether USDT
Source: Coin Review

Presently, Tether’s market capitalization is about $28.31 billion. But five months ago, the market cap was less than half the present value. As of the time of writing, Deltec has not responded to emails sent for more information regarding the loan repayment.

Bitfinex said the previous payment made to Tether was made in entirely fiat currency, which has added more backing to USDT tokens. “Bitfinex made this payment in fiat currency wired to Tether’s bank account,” the official statement from Bitfinex reads.

Bitfinex still facing legal issues

While the loan repayment is a good thing for Bitfinex, the crypto exchange is still the target of several lawsuits. The accusation by NYAG is still standing, although Bitfinex has defended itself on several occasions.

According to the crypto exchange, the said fund was deposited to Crypto Capital, a Panamanian-Company. However, it was not the fault of the exchange that it was seized and safeguarded in several jurisdictions in UK, Portugal, the US, and Poland.

Bitfinex has also questioned the accusations meted against it by NYAG, stating that the presentation against the exchange is misleading. The legal battle is still ongoing and Bitfinex would hope to gain more grounds in the lawsuit following the loan repayment.

Bitfinex Finally Completes Loan Repayment To Sister Firm Tether

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Report: Coinbase Picks Nasdaq over NYSE for Direct Listing

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Coinbase, one of the top cryptocurrency exchanges, has been working stealthily towards its public listing. While the company seeks approval from the Securities and Exchange Commission (SEC), it appears to be making preemptive plans.

Going With the Nasdaq

The San Francisco-based exchange has chosen to pursue a direct stock listing on Nasdaq, The Block reports. The report explained that the company would forgo the New York Stock Exchange (NYSE), contrary to what many had initially thought.

The decision to go through the Nasdaq appears to be the second surprise of its public listing process. Last week, the Silicon Valley firm announced in a blog post that it would issue a direct listing instead of an Initial Public Offering (IPO). According to its registration statement with the SEC, COinbase will issue Class A common stock, as the blog post showed.

The direct stock listing format will not offer new company shares. Instead, it will allow existing shareholders to offer their holdings directly to members of the public.

The arrangement is advantageous for existing company shareholders as it enables them to sell their stock without lockups. Also, unlike the traditional IPO, direct listings don’t require any underwriting services for facilitating sales. Direct listings are also thought to protect against share dilutions.

Coinbase Putting in the Work

Coinbase first announced its public sale last year, filing a Form S-1 with the SEC. The agency is still reviewing the filing, with Coinbase raring to go and hoping to complete the sale this year. Along with the filing, Business Insider also reported that the company had tapped leading investment bank Goldman Sachs to lead the offering.

Coinbase has an extensive history with Goldman Sachs. Fred Ersham, one of the exchange’s co-founders, had worked at the Wall Street bank as a trader. His desire to launch Coinbase with Brian Armstrong led to his exit from Goldman after just two years. Ersham himself left Coinbase in 2017, although he still holds a board position.

The Block reported that the decision to list on the Nasdaq came after the firm’s secondary offering on Nasdaq Private Market last month. Per the report, the secondary market for Coinbase stock launched on January 25, allowing company shareholders with vested equity to sell their shares. A source told the news outlet that shares were matched at $200, bringing Coinbase’s possible valuation to $50 billion (with 254 million outstanding shares). However, the company’s pre-IPO futures contracts are already available on FTX, where shares trade for $277 a piece. Based on those metrics, Coinbase could be worth as much as $70 billion.

Report: Coinbase Picks Nasdaq over NYSE for Direct Listing

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Analysts warn of ‘institutional exhaustion’ with Bitcoin price back below $32K

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The price of Bitcoin (BTC) recovered in the past two days after dropping to as low as $28,850. Following the swift rebound, however, BTC has been unable to break past heavy resistance at $33,000 on Jan. 23, pulling back below $32,000 at the time of writing.

BTC/USD 1-hour price chart (Coinbase). Source: TradingView.com

Coinbase premium returning is bullish, but what now?

Earlier, when the price of Bitcoin started to drop below $32,000, BTC traded much lower on Coinbase than on Binance.

The lack of premium on Coinbase was worrying for two key reasons. First, Bitcoin naturally trades higher on Coinbase due to the minor premium of Tether.

Second, when Coinbase sees a lower price than other exchanges, it shows that there is high selling pressure in the U.S. market.

As the selling pressure on Bitcoin began to increase in the U.S. market, the price of BTC feel steeply in a short period.

BTC/USD (white) vs. Coinbase premium Index (blue). Source: CryptoQuant

But, almost immediately after BTC rebounded from $30,000, the Coinbase premium reappeared. At the time of writing, BTC is around $40 higher on Coinbase than on Binance.

The Coinbase premium re-emerging after nearly 12 hours is a positive sign of a potential trend reversal.

Signs of “institutional exhaustion”

But everyone is far from bullish in the near term, however. Analysts at QCP Capital, a team of traders in Asia, see several signs of “institutional exhaustion.”

Considering that the main narrative around the recent has been the institutional demand for Bitcoin coming from the U.S., the rally may be in danger if the institutional appetite for BTC slows down. They said:

“Signs of institutional exhaustion: We’ve done a timezone analysis which breaks down BTC moves into Asia hours vs. US hours (12 hours each). Since March last year, the clear pattern has been relentless US buying while Asian whales and miners have been on the offer.”

Bitcoin loses strength in U.S. period. Source: QCP Capital

The traders empahsized that the strength in the U.S. trading session lost momentum for the first time.

In fact, throughout the past week, most of the BTC selling pressure came from Asia. This marks a key shift in market sentiment. They added:

“However after the BTC top 2 weeks ago, the strength in US hours has lost momentum for the first time. This is a clear sign of exhaustion in demand from the US institutions and corporates who have been the primary drivers of this bull run.”

What comes next for Bitcoin?

Bitcoin is at risk of a corrective phase throughout the first quarter of 2021 if institutional demand for BTC subsides.

Various institution-focused platforms and vehicles, like Grayscale, are still seeing large inflows, which is indicative of solid institutional demand. At the same time, MicroStrategy continues its policy of buying Bitcoin on each dip with the latest purchase on Friday totaling $10 million. 

“Today, $31,000 was a pocket of strong support, so at least not everyone is selling,” said Chad Steinglass, head of trading at Crosstower, a digital assets capital markets firm.

“We’ll have to wait and see if that wall remains, or if institutions continue to accumulate. If they do, it’s likely that the trend will re-establish itself and continue. If they move to the sidelines waiting for more regulatory guidance, then their lack of buy flows will be acutely felt.”

At the same time, the likelihood of a wider correction remains if the U.S. market continues to see an overall decline in the appetite to accumulate BTC, particularly if the dollar continues to recover in 2021.

Analysts warn of \’institutional exhaustion\’ with Bitcoin price back below $32K

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