20.06.2022 – … it still hurts. And there is always a first time. Even with Bitcoin: for the first time ever in its young, twelve-year history, BTC could break the interim high from the earlier bull cycle at the end of 2017. A sustained puncture of the support could have a signal effect on the chart technique and the further course of events.

“ZeroHedge” puts the interim high at 19,511, we find other data with a high of 19,650 or even 19,345. Whatever the case, that is exactly where BTC is now. Of all times, we are now experiencing a true crypto cascade. What a painful development for the bulls since the all-time high of 67,734 in November. However, the situation is more than oversold – now two gaps are waiting to be closed.


Source: Bernstein Bank GmbH

Here’s what happened: According to data from the trading platform Coinglass, total liquidations in the crypto market were €435 million at the start of the week. The selloff began about a month ago when the cyber currency Luna, used as collateral for the stablecoin Terra, wiped out about $60 billion in market cap. This weekend, a veritable bank run began in the crypto-world: On Sunday, trading platform Celsius Network banned account withdrawals. Babel Finance from Hong Kong also gladly froze customers’ accounts. All this reminds us very much of the Lehman crash in 2008.

Cryptic on the brink
And already last Wednesday, Three Arrows Capital sent out a cryptic and therefore alarming tweet. Specifically: “We are in the process of communicating with relevant parties and fully committed to working this out,” wrote one of the co-founders, without explaining what “this” is exactly. Now we know more: According to the Wall Street Journal, the Dubai-based crypto hedge fund Three Arrows is trying to buy time from creditors to work out a plan to save the company. This grandiose plan could involve the sale of assets or a possible bailout. Or the bankruptcy judge may be waiting, we briefly note. The fabulous financial blog ZeroHedge commented that, as with Bear Stearns some 14 years ago, the Three Arrows case shows that this is not just about one problematic company.

Inflation goes deflation
Possible reasons for the sell-off in cryptos: The current raging global inflation is a harbinger of the coming recession. To put it briefly, this is true: When everything becomes more expensive, people start saving. Consumption first stops in marginal economic sectors such as tourism or textiles, and then eats into the core such as building materials or real estate. Ergo: unemployment, insolvencies. Those who still have money to spare are saving, but spending less and less.

Eye on the new high
But in the midst of the sell-off, a dissenting voice was reliably heard: Wirtschaftswoche” wrote that a cleansing storm was important for the young asset class. Investors should remember the basic principles: “Not your keys, not your coins” – only those who keep their Bitcoin themselves can be sure of them. And further: “So far, bitcoin has risen to a new all-time high after every bear market.” We are curious and will stay on the ball for you on this exciting topic!


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 81% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.