Decentral Block Post

On June 13, cryptocurrency prices plunged deeper into bear market territory after Bitcoin (BTC) sliced through its current trading range and briefly touched $22,600, its lowest level se since December 2020.

According to BTC historical data, the market has now reached valuation metrics that show the price is severely oversold and perhaps near a bottom. Bitcoin has now fallen below its realized price, which represents the average price of every coin in supply based on the time it was last spent on-chain.

While the pain that this most recent capitulation has wrought across the ecosystem can’t be understated, the one glimmer of hope it offers weary crypto traders is that the worst of the decline could have occurred. The coming days will confirm this theory and proof would be institutions and retail traders stepping in to buy the dip.

"Shrimps and whales" accumulate

On-chain data shows that not all traders feel devastated about Bitcoin at yearly lows. Shrimp wallets, wallets that hold less than 1 BTC, and whale wallets with more than 10,000 BTC have been in accumulation mode since the old Terra (LUNA), now known as Luna Classic (LUNC), collapsed in early May.

According to data from blockchain intelligence provider Glassnode, shrimp wallets “have seen a net balance growth of +20,863 since the May 9th Luna crash,” and a total increase of 96,300 BTC since November's all-time high (ATH).

The United States equities markets extended their decline to start the week on June 13. The S&P 500 hit a new year-to-date low and dipped into bear market territory, falling more than 20% from its all-time high made on Jan. 4. 

The cryptocurrency markets are tracking the equities markets lower and the selling pressure further intensified due to the rumored liquidity crisis of major lending platform Celsius and traders possibly selling positions to meet margin calls. This pulled the total crypto market capitalization below $1 trillion.

The sharp declines have led some analysts to project extremely bearish targets. While anything is possible in the markets and it is difficult to call a bottom, capitulations usually tend to start a bottoming formation. Traders may get their buy list ready and consider accumulating in phases after the price stops falling.

What are the important levels that may arrest the decline in Bitcoin (BTC) and major altcoins? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

Bitcoin broke below the immediate support at $28,630 on June 11. This accelerated selling and the bears pulled the price below the critical support at $26,700 on June 12. This indicated the resumption of the downtrend.

Bitcoin (BTC) lost the $28,000 support on June 12 following worsening macroeconomic conditions. The United States Treasury 2-year note yield closed on June 10 at 3.10%, its highest level since December 2007. This shows that traders are demanding higher rates to hold their debt instruments and expect inflation to remain a persistent challenge.

Louis S. Barnes, a senior loan officer at Cherry Creek, stated that as the United States reported its highest inflation in 40 years, the mortgage-backed securities (MBS) markets had zero buyers. Barnes added:

"Stocks are down 2% today [June 10], but would be down a hell of a lot more if considering what a full-stop to housing will mean."

MicroStrategy and Celsius leverage use raised alarms

Bitcoin’s sell-off is adding more pressure to the cryptocurrency market and various media are discussing whether the U.S. Nasdaq-listed analytics and business intelligence company MicroStrategy and its $205 million Bitcoin-collateralized loan with Silvergate Bank will add to the current crypto collapse. The interest-only loan was issued on March 29, 2022, and secured by Bitcoin, which is held in a mutually authorized custodian's account.

As stated by Microstrategy's earnings call by chief financial officer Phong Le on May 3, if Bitcoin plummeted to $21,000, an additional amount of margin would be required. However, on May 10, Michael Saylor clarified that the entire 115,109 BTC position could be pledged, reducing the liquidation to $3,562.

Ethereum's native token Ether (ETH) fell to as low as $950 on Uniswap—a decentralized crypto exchange— this June 13, about 20% lower than its spot rate across other exchanges.

Over $130M ETH sold in six hours

The incident happened at around 3:00 am UTC after a whale dumped 65,000 ETH for multiple "stablecoins," including USD Coin (USDC), Tether (USDT) and Dai (DAI).

A piece of evidence noted that the whale sold its ETH holdings to pay off nearly $73 million worth of debt at Oasis.app, a DeFi lending platform. The duration of the sell-off saw ETH's liquidation price dropping from $1,200 to $875.

The Oasis borrower continued the selling spree—dumping another stash of nearly 28,000 ETH five hours after the first selloff—to pay back another $32 million in debt. This time, the liquidation price rose from $892 to $1,200, as shown below.

As a result, the whale dumped around 93,000 ETH within just six hours. The amount equals toroughly $112 million at June 13's ETH/USD price.

Bitcoin (BTC) is trading at its lowest since mid-December 2020 on June 13, but the bottom could be anywhere.

As the weekend sell-off intensifies, BTC/USD has now broken below its realized price for the first time since March 2020, data from Cointelegraph Markets Pro and TradingView confirms.

Bitcoin clings to realized price

At around $23,400, the realized price — the average price at which each BTC last moved — is acting as the first solid support so far on lower timeframes.

Previous levels, including those highlighted as potential bottoms, have failed to hold, and sentiment continues to favor further sell-side pressure thanks to the Celsius aftermath, inflation and forthcoming actions by the United States Federal Reserve.

Where BTC/USD could put in a final macro floor, meanwhile, is now a topic of heated debate.

Ethereum is plagued with criticisms of its less than optimal scaling capabilities and high gas prices. There have been talks about increasing the scaling capacity of the Ethereum mainnet for a while now. 

However, the Ethereum ecosystem needs a solution for scaling right now, and if Ethereum is not able to give these new applications a platform with enough scaling capabilities, they can seek alternatives like the BNB Chain or Cardano. Optimism rollout was created to solve exactly the scalability problem of Ethereum.

Optimism Rollup network is one of the several solutions trying to address Ethereum’s congestion problem. The Ethereum network is often congested to the almost maximum capacity, and until upgrades to the main blockchain are made, scaling solutions like Optimism allow Ethereum’s transactional abilities to remain usable without shelling out a fortune on gas fees.

In short, Optimism uses advanced data compression techniques to speed up and cut the costs of Ethereum transactions. They do so by a technique known as called Optimistic Rollups, where multiple transactions are “rolled up” into one transaction and settled on another cheaper blockchain. The verified transactions are then fed back to the main Ethereum blockchain. The biggest advantage of Optimistic Rollups is the fact that they do not compute by default, which theoretically leads to scalability gains. Estimates say Optimistic Rollups can offer 10-100x improvements to scalability. On the downside, however, is the existence of a “challenge period,” which is a time window in which anyone can challenge assertion and increase withdrawal time.

Battle of the rollups

Now, a natural question arises: How is this different from widely used zero-knowledge (zk) Rollups? 

Usually, bear markets bring about a feeling of uncertainty in any investor. Even more so for a newcomer, for whom it can feel like the end of the world. It may even be common knowledge that during bull cycles, investors are sure of making gains. Whereas in bear markets such as this, an unimaginable amount of pessimism sets in.

The co-founder and strategic lead at the Kylin Network, Dylan Dewdney, told Cointelegraph that the two major mistakes that investors make while feeling anxious are “One, over-investing and two, not investing with conviction.”

“You need to find the sweetspot where you have enough conviction in your investments while managing the resources devoted to them such that you are 100% comfortable with being patient for a long time. Lastly, bear markets are where the magic really happens — buying Ether at $90 in December 2019, for example,” Dewdney said.

According to data from blockchain analysis firm Glassnode, traders made almost 43,000 transactions buying and selling requests on crypto exchanges in early May. This accounted for a whopping $3.1 billion worth of Bitcoin. But, the panic that caused those requests came from the crash of Terra, which saw the market dip even further.

Bear markets occur when there is a general dip in the prices of assets, of at least 20%, from their most recent highs. For example, the current bear market has Bitcoin (BTC) down by more than 55% from its November record high of $68,000. Bitcoin is now trading below the $25,000 mark at the time of writing.

The ongoing crisis of Celsius’s native token has nothing to do with the stablecoin provider Tether and will not impact its USDT reserves, according to the company.

Tether issued a statement on Monday regarding the major cryptocurrency lending platform Celsius halting withdrawals due to its rumored liquidity crisis.

According to the statement, Tether’s lending activity with Celsius has “always been overcollateralized” as with any other borrower and “has no impact” on the company’s reserves.

The announcement also described the ongoing issues with Celsius as an “unfortunate result of market volatility and extreme market conditions.”

The Tether company is the issuer of USDT, the largest stablecoin pegged to the United States dollar based on a 1:1 ratio. At the time of writing, USDT’s market capitalization amounts to $72 billion, significantly exceeding the market value of its major competitor, the Circle-backed USD coin (USDC).

Older Bitcoin (BTC) mining rigs are finding it difficult to generate positive revenues during the ongoing crypto market decline.

75% drop in Bitcoin mining profitability

The profitability of many Application Specific Integrated Circuit (ASIC) machines has dropped into the negative zone after Bitcoin's fall below $24,000 this June 13, data fetched by F2Pool shows. Those machines include Antminer S11 and AvalonMiner 921, which are now close to their "shutdown price."

Notably, Bitmain's Antminer S11 offers a maximum hash rate of 20.5 Terra-hash per second (TH/s) for a power consumption of 1,530 watts.

The cost of running an Antiminer 211 is 0.13 kilowatts per hour (KW/h) based on the global average electricity cost. As a result, it would consume around $4.5 worth of power every day versus the roughly $2 income in the same period, according to data gathered by ASIC Miner Value.

Similarly, the cost of running Canaan's AvalonMiner 921 comes to be around $5 per day compared to its income of over $2 in the same period.

While the market has not yet fully recovered from the onslaught caused by the TerraUSD (UST) depeg, another stablecoin project shows signs of distress, causing fears and speculation within the community. 

Stablecoin protocol USDD’s price dipped to $0.97 on major crypto trading platforms on Monday. Because of this, the market started to keep an eye on the project with fears that the project will follow the footsteps of Terra (LUNA), now officially Luna Classic (LUNC). CurveSwaps, a bot that monitors large asset transfers flagged that $1 million USDD was recently swapped to 997,339 Tether (USDT).

On the other hand, blockchain analytics platform Nansen has also detected that one of the funds that capitalized on the UST depeg has started actively transferring larger amounts of USDD and other stablecoins. Nansen_intern tweeted:

Looking at data regarding USDD's collateralization, researcher Resdegen argued that looking at the stablecoin's backing, USDD is only 92% collateralized. Without considering Tron (TRX), the ratio falls down to 73%.

In response to the “extreme market conditions,” the Tron DAO Reserve recently announced that it received 700 million USD Coin (USDC) to defend the USDD peg. With this in play, the team behind the stablecoin explained that the collateralization ratio of USDD is now boosted to 300%.

Bitcoin (BTC) faced continued selling pressure before the June 13 Wall Street open as Ether (ETH) revisited multiyear lows.

Bitcoin battles for $24,000

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD eclipsing its 10-month lows set in mid-May.

The largest cryptocurrency faced bearish triggers on multiple fronts, these coming from both within and beyond the crypto sphere.

Fintech protocol Celsius appeared on the brink of meltdown after operations were halted, turning billions of dollars in collateral into new risk for crypto markets. In an event ironically similar to that which caused the May rout, Bitcoin and altcoins kept falling as fresh uncertainty filled the air.

Macro conditions were hardly better, with Asian markets selling off and Wall Street futures looking set to continue the downtrend that set in last week.

Bitcoin (BTC) faced continued selling pressure before the June 13 Wall Street open as Ether (ETH) revisited multiyear lows.

Bitcoin battles for $24,000

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD eclipsing its 10-month lows set in mid-May.

The largest cryptocurrency faced bearish triggers on multiple fronts, these coming from both within and beyond the crypto sphere.

Fintech protocol Celsius appeared on the brink of meltdown after operations were halted, turning billions of dollars in collateral into new risk for crypto markets. In an event ironically similar to that which caused the May rout, Bitcoin and altcoins kept falling as fresh uncertainty filled the air.

Macro conditions were hardly better, with Asian markets selling off and Wall Street futures looking set to continue the downtrend that set in last week.

Crypto exchange Binance announced it is ending support for Litecoin (LTC) transactions sent through the latest MimbleWimble (MWEB) upgrade.

Binance warned that any transaction sent through the MWEB function would be lost since the crypto exchange can’t verify the sender’s address. The crypto exchange didn’t respond to Cointelegraph’s request for comments at the time of publishing.

The announcement comes just days after major South Korean crypto exchanges delisted LTC due to the latest upgrade, which makes transaction information confidential. The delisting came just weeks after five crypto exchanges issued warnings similar to Binance. However, the delisting didn’t come as a surprise, as South Korea is known for its strict privacy laws, which prohibit anonymous transactions on crypto exchanges.

The MWEB upgrade on LTC is one of the critical updates that went live earlier this year, nearly two and half years after it was first proposed. The upgrade added several privacy features and made the LTC blockchain more scalable.

Gate.io, another popular crypto trading platform, also ended support for MWEB Litecoin transactions, claiming anonymous transactions are not supported on the platform.