Kategorie: Crypto Markets

Daily headlines and news about crypto markets.

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Unusual liquidity pressures force Babel Finance to suspend withdrawals

Due to the ongoing crypto market meltdown, Babel Finance, an Asian-based crypto lender firm, has suspended all their products’ redemptions and withdrawals from clients, noting that their firm is facing ‘’Unusual liquidity pressure.’’

Today, June 17, Babel Finance wrote a notice on their official website to inform their customers of the decisions they are taking to protect them as the markets continue to trade sideways. It’s important to note that majority of the institutions in the crypto industry have been through conductive risk events.

The notice read:

‘’Recently, the crypto market has seen major fluctuations, and some institutions in the industry have experienced conductive risk events. Due to the current situation, Babel Finance is facing unusual liquidity pressures. We are in close communication with all related parties on the actions we are taking in order to best protect our customers. During this period, redemptions and withdrawals from Babel Finance products will be temporarily suspended, and resumption of normal service be notified separately. We apologize sincerely for any inconvenience caused.’’

DeFi platforms increasingly pausing withdrawals

With the plunging crypto markets, DeFi platforms seem to be resulting in pausing withdrawals with others like Celsius going as far as pausing swaps and internal transfers.

Yesterday, Finblox, a staking platform, also shared a tweet stating that they have restricted withdrawals from their platform to $1,500 per month from a limit of $500 per day as a result of its connection with the Three Arrows Capital (3AC).

Three Arrows Capital has found itself at the center of insolvency speculations following the deteriorating crypto prices. Today, the firm’s leveraged positions were liquidated by the three crypto exchanges namely FTX, BitMEX, and Deribit.

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MakerDAO reduces exposure to Celsius, disables Aave DAI supply

In a move to reduce exposure to the embattled Celsius Network, MakerDAO has voted to temporarily disable the Direct Deposit Module (D3M) of DAI for DeFi lending platform Aave. Aave users will not be able to access DAI loans on Aave using stETH as collateral through the Direct Deposit Module.

MakerDAO is the organization behind the DAI stablecoin.

Through a tweet made on Thursday, MakerDAO announced that its community members had voted to temporarily suspend Aave DAI Direct Deposit Module.

According to the tweet, the outcome of the vote was to be executed from June 17 2022 21:03 UTC.

Reducing Maker’s exposure to Celsius

The governance proposal to disable DAI supply on Aave was put forward earlier this week in an attempt to reduce Maker’s exposure to the besieged crypto lending platform Celsius.

According to the governance proposal, the Target Borrow Rate will be set to zero in the smart contract responsible for D3M thus preventing further borrowing by Celsius using Aave’s D3M.

Part of the proposal read:

“This change is being proposed to temporarily disable the Aave D3M. The Aave DAI Direct Deposit Module (D3M) Target Borrow Rate (bar) will be set to 0”

How the Direct Deposit Module (D3M) works

The Direct Deposit Module (D3M) is the one that allows interactions between the Maker ecosystem and other third-party lending pools including Aave. The main objective of the D3M is to maintain DAI’s interest rate across the lending pools, especially on Aave.

Currently, Aave has a total exposure of 200 million DAI tokens through the D3M. Out of that, 100 million DAI tokens are borrowed by Celsius using stETH (a representation of ETH staked with Lido) collateral.

Celsius relationship with stETH

Celsius earlier this week indefinitely paused withdrawals, swaps, and transfers amid growing concerns about the crypto lender exposure to stETH. There was growing uncertainty on stETH due to the upcoming Ethereum merge that made stETH to lose its peg against ETH.

As a result, there was very heavy selling pressure on the stETH putting Celsius in a precarious position since it had locked customer funds into stETH.

If the worst comes to the worst and Celsius becomes insolvent and faces a margin call, it would be forced to dump its stETH; something that would cause the stETH to de-peg further from ETH. This would mean the 100 million DAI tokens that MakerDAO had lent to Celsius would become irrecoverable.

To protect their lending power and prevent Celsius from borrowing more DAI tokens using stETH as collateral, MakerDAO has voted to temporarily disable the D3M.

According to a proposal referred to as “proposal 83, following the disabling of D3M, Aave is also considering freezing stETH and its use as collateral on the platform.

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Highlights June 17: Bitcoin at $20k, Polkadot drops out of top 10

The crypto market maintained its bearish trajectory over the past 24 hours, as the majority of top 10 cryptos were in the red this morning. 

Top cryptos

Bitcoin was down more than 5% at time of writing, trading around $20,700. Ethereum, the second crypto, is trading around $1,100, down almost 40% the last 7 days. 

Cryptos outside the top 10 mostly registered slight gains in the range of 2-4%. Polkadot is at #11 with a loss of around 4% in the last 24 hours. 

Top movers

Outside the top 20, cryptos were mixed. Helium continues its ascent, up around 7% today. Elrond and Theta Network are also up around 7%. Closing out the winners’ list is Bora, up around 6%. 

On the other end, Nexo continues to drop, down 6% so far today. THORChain and Flow are down 5%.

Trending

The biggest winner today is SIRIN LABS Token (SIRIN), a utility token to be used as a payment method within the ecosystem of the company that created it, Sirin Labs.

At present, the ecosystem consists of FINNEY smartphone, SIRIN OS, SIRIN Labs retail locations, and their dApp store. The company is working on the first blockchain smartphone in history. SIRIN gained 961% today.

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Spotlight on Celsius as Texas securities regulator opens investigation: Report

Regulatory scrutiny on Celsius Network, a leading crypto lender in the market that’s hit turbulence, continues to mount, according to a report by Reuters on Thursday.

Celsius hit headlines this week as concerns over a potential flip into insolvency heightened following its decision to pause customer withdrawals.

According to the report, the Texas State Securities Board has confirmed that it has indeed opened an investigation against the crypto lender.  Other investigations have been opened in Alabama, Washington and New Jersey.

The Texas regulator has reportedly certified the matter as a “priority,” with concerns that the company’s situation poses serious financial ramifications for customers.

The probe into Celsius comes as the New Jersey-based firm looks to navigate the murky waters that it currently wades in. On Wednesday, the company moved to hire business restructuring lawyers.

Celsius CEO Alex Mashinsky has assured customers and the broader community that the firm is “working non-stop” on the issue. Other than this, not much has been forthcoming and the ‘freeze’ on all withdrawals remains in place.

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Bitcoin Investor’s Net Realized Loss Hit $4.23 Billion Last Week: Glassnode

Bitcoin price fell from highs of $30,300 this past week to test lows near the critical $20,000 level this week.

The sell-off, according to on-chain data firm Glassnode, brought realized losses for Bitcoin investors in US dollar terms to over $4.23 billion. They are historical figures – probably as Bitcoin has fallen from new heights unlike before.

Per the platform’s latest on-chain report, the on-going sell-off saw both short term holders and long term holders sink into unprofitability – the losses being three times larger than what the market experienced in March 2020.

“Bitcoin investors have locked in the largest USD denominated Realized Loss in history last week. The $BTC spent on-chain this week realized net losses of over $4.23B. This eclipses all major sell-offs in 2021, and is 3x larger than March 2020,” Glassnode tweeted on Thursday.

Short term holders lose 0.01% of Market cap/day

Glassnode says that short term holders, (the new entrants in the market and active traders), sold off aggressively this past week.

However, the net realized losses for this cohort was 0.01% of Bitcoin market cap per day, and pale in comparison to major drawdowns recorded over the past five years. For instance, STHs lost 0.02% of the market cap when BTC price fell sharply in March 2020.

Long term holders face first capitulation in 2021-2022 cycle

A long term holder (LTH) refers to Bitcoin supply that hasn’t moved for the past 155 days or more. This group of wallets have greater conviction on BTC’s long term value and thus rarely sell.

 According to the Glassnode report, this cohort of holders has net realized losses equaling 0.007% of market cap each day – “as large as March 2020.”

“Bitcoin Long-Term Holders however realized major losses, equal to 0.007% of the Market Cap per day. This is almost as large as March 2020, and is the first major LTH capitulation event in the 2021-22 cycle.”

BTC/USD is priced around $21,260 at the time of writing, about 2.6% up in the past 24 hours. Veteran trader Peter Brandt says BTC is likely to see a relief rally. However, sceptically, he predicts more pain. 

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