TA Tuesday: Both macro and micro economic factors created a storm of disarray in the market this week

At the time of writing, $BTC is trading at $21.900 (-29.65% in 7 days), $ETH is trading at $1,150 (-36.41% in 7 days), and the ETH/BTC spread is trading at 0.05256 (-9.75% in 7 days). Bitcoin is holding up a bit better despite the sell-off.

Both crypto and TradFi markets have suffered due to a combination of macro and micro that turned out to be a perfect storm. Please keep in mind what I discussed in last week’s commentary, () coupled with the following news:

1. US CPI data shows that inflation has not peaked yet (actual: 8.6% YoY vs. the forecast of 8.3% YoY). And there might still be some room for even worse numbers as the current inflation rate is driven by soaring energy costs, but I still believe that soaring commodities prices such as wheat and milk are not well represented in the index.

2. The de-pegging of stETH/ETH, as the market has higher risk aversion and credit-risk concerns. To make a long story short: the price of staked ETH (stETH) depends on

(i) the market’s appetite,

(ii) on the chances that the merge is successful or delayed,

(iii) smart contract risk,

(iv) credit/counterparty risk as companies such as Celsius “due to extreme market conditions” paused all withdrawals, swaps, and transfers between accounts.

Celsius has at least $475M worth of stETH in a public wallet.

stETH is now at a 5.05% discount because of poor expectations concerning all of the three points above.

For sure, this is not „THE“ catalyst, but it is both contributing and exacerbating the DeFi losses.

Crypto assets are not the only assets suffering: $SPX is down 21.33% YTD, US Government Bonds 10y Yields are 3.324%, $DXY bridged 105, and the VIX is trading at 34.02. I still believe that the markets are behind the curve, and I would not be surprised to see both stronger USD and higher yields.

This week, two majors events will take place:
– FOMC meeting on Wednesday (expected: 75bps hike)
– $15B of treasuries set to mature and get out of the Fed Balance Sheet on Wednesday.

On the Crypto side: key levels to watch for potential liquidations are:
– $ETH below 950
– stETH/ETH below 0.8 (20% discount)
– $BTC below $20k.

Coinglass data shows that on June 13, $562M were liquidated due to long and short leveraged BTC positions (the largest in three months) both on the long and short side, market speaking: this is not a thing that I like.

BTCUSD has now triggered the 200-weeks MA. Historically, this has always been a call for bottom. I am more than excited to see what will happen now as our trading desk was definitely skewed on the buy side for both BTC and alts.

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