{"id":163071,"date":"2022-09-01T21:37:05","date_gmt":"2022-09-01T21:37:05","guid":{"rendered":"https:\/\/precoinnews.com\/?p=163071"},"modified":"2022-09-01T21:37:05","modified_gmt":"2022-09-01T21:37:05","slug":"bitcoin-plummets-but-is-there-more-downside-ahead","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/crypto\/bitcoin-plummets-but-is-there-more-downside-ahead\/","title":{"rendered":"Bitcoin Plummets but is there More Downside Ahead?"},"content":{"rendered":"
By Marcus Sotiriou, Analyst<\/em>\u00a0at the\u00a0UK based digital asset broker\u00a0<\/em>GlobalBlock<\/em><\/p>\n Despite the Nasdaq bouncing 0.21% yesterday and both the S&P 500 and Nasdaq futures showing gains this morning, Bitcoin continues to plummet. What are the factors contributing to this extreme sell off?<\/p>\n Systemic issues in crypto infrastructure companies such as Celsius<\/strong><\/p>\n Celsius are one of the biggest lenders and could potentially become insolvent. The Celsius on-chain liquidity crisis has become healthier over the past 24 hours, as they have added to their collateral across the board for 3 main positions. One of these positions involving a Maker wBTC Vault now has a liquidation price of $14k, which was once around $22,500. This is because they have paid down more of their DAI debt.<\/p>\n There is a clearly a high level of uncertainty right now, in regard to the significant exposure Celsius has to stETH in proportion to the Curve pool size.<\/p>\n I think many people are waiting for more information with their stETH position, so they can have confidence to buy again \u2013 if a Celsius deal is reached and publicised this could lead to a relief rally.<\/p>\n Insolvency of crypto hedge funds like 3 AC (Three Arrows Capital)<\/strong><\/p>\n This is one of the biggest crypto hedge funds, and one of the biggest borrowers. At its peak, it owned over 5 billion dollars of assets and hundreds of thousands of ETH. If they collapse, this will mean that lenders would incur drastic economic risk. The Profit-Loss difference between how much they owed versus what they get in liquidating their collateral is at risk.<\/p>\n Lenders will be forced to protect themselves by withdrawing credit from the system and result in further de-leveraging of crypto assets. I think it is likely that more people need to de-lever still.<\/p>\n Unwind of liquidity in global markets due to rate hikes and QT<\/strong><\/p>\n QE has led to global markets and crypto rising over the past couple of years, but the opposite has meant that investors are forced to unwind their positions, particularly in risk-on assets. We have the Federal Reserve interest rate decision today at 7pm UK time, which will be determine how aggressive they decide to be and therefore the outlook over the next 6 months. I think a very aggressive Federal Reserve might be the best way forward for markets, so that the Federal Reserve will be able to resume QE sooner.<\/p>\n