whales

Crypto whales suffer huge losses due to USDC depeg, SVB collapse

The depegging of the USDC stablecoin has affected other stablecoins, wreaking havoc on crypto projects and stakeholders in a massive chain reaction.

In response to the extraordinary depegging event of the USD Coin (USDC) stablecoin caused by the collapse of its counterparty Silicon Valley Bank (SVB), crypto whales have reported severe losses and appear to have embarked on a series of capital flights to protect assets. Du Jun, the co-founder of cryptocurrency exchange Huobi Global, posted: 

“[I] dodged, LUNA, dodged 3AC, even dodged FTX [and their collapse], but I couldn’t avoid Silvergate, nor SVB and USDC. Asked a few crypto veterans; losses amounted to >$1 billion in stock and deposits, myself included. I’m very upset, and it’s time to cut down on my budget.“

The same day, blockchain personality and Tron founder Justin Sun reportedly withdrew 82 million USDC from the decentralized finance (DeFi) protocol, Aave v2, over a series of transactions and swapped from Dai (DAI). At the time of publication, 82 million USDC is worth $75.26 million. 

Speaking of DAI, MakerDAO, the stablecoin’s issuer, filed an emergency protocol on March 11 that, among many items, called for restrictions on minting DAI using USDC to prevent panic selling. MakerDAO is one of the largest holders of the stablecoin, with over 3.1 billion USDC ($2.85 billion) in reserves collateralizing DAI, which also depegged as a result. Subsequently, crypto projects incorporating DAI in their tokenomics also suffered losses due to a chain reaction. 

Curve Finance, a popular DeFi protocol for trading stablecoins, reported a historic all-time high daily trading volume of $5.67 billion due to the events. In context, the protocol only has a total value locked of $3.77 billion. A few other platforms simply could not handle the sheer volume of trade requests relating to USDC. In one incident, a user received just 0.05 Tether (USDT) after paying over 2.08 million USDC in a swap that resulted in a permanent loss. In an update, KyberSwap, the decentralized exchange responsible for facilitating the swap, said it was “assisting with funds recovery” and is in touch with the user regarding the issue. 

According to Loki Zeng, a prominent DeFi analyst at New Huo Technology, Circle’s reserves are spread among $32.4 billion in treasury instruments, $3.3 billion in deposits at SVB, and $7.8 billion in deposits at other financial institutions. Zeng wrote:

“For USDC to go bust, it needs to satisfy three conditions; there is an abundance of deposits on SVB, and three other at-risk banks, the recovery rate for such deposits remains low, and USDC cannot mitigate such losses.“

Zeng added that his personal opinion is that “there is a low probability of an issue, and even if there is an issue, it won’t be as severe as FTX.“ Nevertheless, the DeFi analyst added that his estimate for the net value of USDC is “$0.885 at extreme situation and $0.985 at normal situation.“ At the time of publication, the price of USDC has fallen 8.30% in the past 24 hours to $0.9163.

Alex Svanevik, CEO of blockchain analytics firm Nansen, also commented that Circle and USDC “can make it.“ However, Svanevik also warned that Circle requires “top-class execution over the next few days,” such as “flawless redemptions,“ and no calls for “bailouts publicity.“ In another tweet, Svanevik also revealed that a user moved 25 million USDC from their PulseX sacrifice wallet and exchanged it for DAI.


Small Bitcoin investors stop whales from crashing BTC price below $18K

Bitcoin price has avoided a bigger plunge below $18,000 in recent months, raising expectations that a market bottom is forming.

An army of small Bitcoin (BTC) investors has been fighting with their larger counterparts for months to keep the price above $18,000.

Bitcoin accumulation strong among fishes

Notably, there has been some on-chain divergence between so-called whales (entities that hold more than 1,000 BTC) and fishes (entities that hold relatively smaller amounts of BTC) as Bitcoin continues to fluctuate inside the $18,000-$20,000 area.

Bitcoin fishes have been accumulating BTC during the coin’s sideways trend. For instance, the net Bitcoin supply held by addresses with 100-1,000 BTC balance has increased from 3.71 million in June to 3.77 million in October, according to data provided by Glassnode.

Bitcoin supply held by entities with 100-1K BTC balance. Source: Glassnode

Similarly, the supply of Bitcoin held by addresses with a 10-100 BTC balance has also risen from 3 million to 3.15 million in the same period. The trend is similar across the entities holding anything between 0.001 and 10 BTC.

Meanwhile, the same period of Bitcoin’s sideways price action coincided with a decline in BTC supply held by whales. For instance, the Bitcoin supply held by the 1,000-10,000 BTC cohort has dropped from 3.82 million to 3.69 million since June.

Bitcoin supply held by entities with balance 1K-10K BTC. Source: Glassnode

Additionally, the 10,000-100,000 BTC cohort has decreased its Bitcoin holdings from 1.98 million to 1.92 million in the same timeframe.

A basic interpretation of the on-chain data mentioned above is that fishes are more confident than whales about a potential Bitcoin price bottom near $18,000.

But while these small investors may have been absorbing massive selling pressure created by larger investors, the downside risk is historically greater with a decreasing whale population, as shown below. 

Number of Bitcoin whales vs. BTC price. Source: Glassnode

Interestingly, one of the few exceptions is when Bitcoin reached its all-time high price of $69,000 while the number of whales remained relatively flat. This may suggest that whales are having less influence on the market compared to previous years, particularly as the balance on exchanges continues to hit multi-year lows. 

BTC correlation with gold rises

Fishes continue accumulating amid reports that investors are viewing Bitcoin as a safe haven asset all over again.

For instance, Alkesh Shah and Andrew Moss, digital strategists at Bank of America, cited Bitcoin’s weakening correlation with United States stock indexes and strengthening correspondence to gold’s price moves as a sign that the cryptocurrency is looking to live up to its “digital gold” narrative in the future.

Notably, Bitcoin’s 40-day correlation with riskier markets, such as Nasdaq Composite and S&P 500, has been flattening near 0.69 and 0.75, respectively, which are below their record levels from a month ago. On the other hand, its correlation with gold has surged from zero in August to 0.67 in October.

BTC/USD and XAU/USD 40-day correlation coefficient. Source: TradingView

“A decelerating positive correlation with SPX/QQQ and a rapidly rising correlation with XAU indicate that investors may view Bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains to be seen,” they wrote.

Related: Bitcoin will shoot over $100K in 2023 before ‘largest bear market’ — trader

Others, however, expect Bitcoin’s price will eventually break down below the $18,000-support level. They include independent market analyst Filbfilb, who argues that the BTC price could drop as low as $10,000, given the tight correlation with risk assets and macroeconomic headwinds.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

‘Can it get any easier?’ Bitcoin whales dictate when to buy and sell BTC

Whale buying and selling has effectively told traders how to position their bids and asks, data reveals.

Bitcoin (BTC) left both long and short traders behind in May and June, but data suggests trading it may be “easier” than many imagine.

According to on-chain analytics resource Whalemap, Bitcoin whales have all but dictated market performance in recent weeks.

Whales help pin Bitcoin at $30,000

In a fresh analysis published on June 7, Whalemap researchers showed that BTC/USD local tops and bottoms have coincided with areas of heightened whale activity.

When Bitcoin’s largest wallet entities choose to buy or sell, the price reacts accordingly. For those looking to reduce risk trading short timeframes, it may thus suffice to act according to where popular whale levels lie.

“Can it get easier than this?” Whalemap summarized in part of a Twitter post.

Bitcoin whale wallet inflows annotated chart. Source: Whalemap/Twitter

As Cointelegraph reported, some whales are of more interest than others. Over the past week, one such entity on Binance has been contributing to Bitcoin’s narrow trading range with a series of buys and sells.

“This binance whale has marked every local top/bottom for the last two weeks,” popular analyst Credible Crypto added in new Twitter comments on June 8.

“Been watching him come and go. Accumulating at the lows, capping price at the highs. Most recently filled 2,000 BTC (60 million) at the local lows at 29.2k before this pump we are seeing now.”

That “pump,” just like that from earlier in the week, has been short-lived, with BTC/USD plateauing then reversing, losing practically all the gains from its initial uptrend, data from Cointelegraph Markets Pro and TradingView shows.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

“Annoying” stocks correlation keeps pressure on BTC

Zooming out beyond internal factors, meanwhile, optimism remains thin for inflationary macro conditions favoring crypto strength going forward.

Related: BTC price snaps its longest losing streak in history — 5 things to know in Bitcoin this week

While whales keep prices rangebound, Bitcoin’s correlation to stock markets is also frustrating traders. 

Stocks themselves are further unlikely to feel relief in the short term, commentator Bob Loukas admitted on June 7 as monetary tightening worldwide gathers pace.

“Still don’t see macro catalyst (yet) for bottom in equities. As stated before has look of a cyclical bear market that needs more time,” he said.

“Price action on Cycle front confirms, move down into summer months. Been underweight a while, happy to be wrong. Wont fomo a ripping rally.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.