Bitcoin’s and Ethereum’s 30% gains last week were short-lived, as both market leaders depreciated more than 10% over the last week, with Bitcoin falling below the key $20,000 support level.
The world’s favorite cryptocurrency, as of this writing, was trading for just $19,203, and leading rival Ethereum suffered steeper losses, falling about 15% over the week to $1,045.
Several leading cryptocurrencies posted notable losses this week, including Polygon and Near Protocol, each down 22%, to $.47 and $3.30, respectively. Avalanche fell 23% to $16.32, Solana fell 23% to $32.63, and Polkadot fell 18% to $6.80.
Virtually every top 30 cryptocurrency posted losses of double-digit percentage figures except UNUS SED LEO, TRON, and Dogecoin. LEO dropped 1.5% to $5.77, while Dogecoin also fell 1.5%, to $0.06719. Meanwhile, TRON only depreciated by 0.69% this week to $0.06485.
3AC files for bankruptcy
There was little room for optimism in the week’s news, most of which merely confirmed fears the sector is entering a recession.
More details emerged on Monday over the insolvency of Singapore-based crypto hedge fund Three Arrows Capital (3AC), with reports that crypto broker Voyager Digital had served 3AC with a default notice for failing to repay some of its $673 million debt from loans of 15,250 Bitcoin and $350 million in USDC.
On Wednesday, Sky News reported that 3AC was ordered to liquidate by a court order in the British Virgin Islands (BVI), and that the management consulting company Teneo would assist in the insolvency proceedings.
Bloomberg reported on Friday that 3AC had filed for Chapter 15 bankruptcy, a move calculated to protect 3AC’s U.S. assets while the liquidation happens in BVI.
Bitcoin’s bear run
On Monday, a report by digital asset manager Coinshares revealed that outflows for Bitcoin-specific funds last week totalled $453 million, roughly equal to all inflows over the past six months—and the highest dollar amount ever.
Per CoinShares, last week’s outflows were the third-largest on record in terms of assets under management (AUM), representing 1.2% of the entire AUM of all funds tracked by CoinShares. (The worst outflows by percentage, 1.6%, were recorded during 2018’s bear market.)
Also on Monday, Coinbase shares fell 9% to $56.88 after Goldman Sachs downgraded the company from “neutral” to “sell” and lowered its price target from $70 to $45. Coinbase recently said it would fire 18% of its workforce in addition to rescinding some job offers from incoming employees, but analysts said additional measures would be required to stem future losses.
That same day, SEC Chair Gary Gensler reaffirmed in an interview with CNBC his agency’s view that Bitcoin is a commodity, not a security, but refrained from extending the label to any other cryptocurrencies.
Gensler said Bitcoin is an example of a crypto asset that should be regulated under the Commodity Futures Trading Commission (CFTC), as he’s said previously. The previous SEC administration also regarded Ethereum as a commodity.
On Wednesday, the SEC rejected Grayscale’s application for a Bitcoin Spot ETF, saying the digital asset management giant had not done enough to protect investors from “fraudulent and manipulative acts and practices.” The next day, Grayscale CEO Michael Sonnenshein announced on Twitter that his company is filing a lawsuit against the Securities and Exchange Commission.
In all, the last three months have been so bearish for Bitcoin that the market leader posted its second-worst quarterly performance ever. That’s all right for some, though. Bitcoin whales, like MicroStrategy CEO Michael Saylor and El Salvador’s authoritarian president, Nayib Bukele, are buying the dip.