Ben Strack

I recently chatted with Ledn CEO Adam Reeds about crypto-backed loans. Spoiler: He expects the category could exponentially boom.&nbsp;



One thing he mentioned to me was, “Price is the best marketer.”&nbsp;



BTC’s price rose nearly 40% in November — fueled by the victory of <a href="https://blockworks.co/news/revisiting-trumps-crypto-promises-after-his-election-win">pro-bitcoin Donald Trump</a> and scores of crypto-friendly Congressional candidates. It more recently broke the $103,000 barrier.&nbsp;



Ledn, for much of this year, did roughly $1 million per day of crypto-backed collateral financing (mostly BTC). This allows clients to borrow cash without having to sell their BTC or ETH. The company was doing about 2.5x that amount in November, Reeds noted.&nbsp;



“The last cycle institutions did the work and they said this is interesting, what about this bitcoin thing?” he said. “Things take time. You’re in an organization with several hundred or several thousand people; you don’t build consensus overnight.”



Read more: <a href="https://blockworks.co/news/btc-new-all-time-high-100k">Bitcoin sets new all-time high above $100K</a>



Reeds noted previously seeing retail investors with FOMO (fear of missing out) on crypto. This time the institutions seem to be feeling that fear, the CEO added.



Financial services giant Cantor Fitzgerald said in July that it <a href="https://www.cantor.com/cantor-fitzgerald-to-launch-bitcoin-financing-business/">planned</a> to launch a bitcoin financing business. CEO Howard Lutnick, recently selected by Donald Trump <a href="https://blockworks.co/news/trump-nominates-commerce-dept-leader">to lead the Commerce Department</a>, said at the time the firm intended to launch with $2 billion of lending.&nbsp;



Reeds said he estimates the global bitcoin-backed loan market (<a href="https://blockworks.co/news/retail-adoption-crypto-cycle">on the retail side</a>) to currently be between $1 billion and $2 billion.&nbsp;



“The analogy I like is, ‘What if this was like real estate mortgages on the residential side?’” Reeds said. “Well, 60% of homes have a mortgage on them, and what if 60% of bitcoin effectively had a mortgage on it? Suddenly the market’s like $400 billion.”



“That’s with bitcoin at $95,000,” he added. “What if bitcoin’s at $250,000? All of these things start to change.”



Keep reading for more excerpts from Blockworks’ interview with Reeds.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Blockworks: What has changed at Ledn <a href="https://blockworks.co/news/crypto-impacts-since-election-outcome">since the US election</a>?



Reeds: We have been approaching more traditional credit funds that would, for example, finance student loan packages — things like that, that are more alternatives.



I would say the gap we’re seeing is that in this market pullback over the last couple years (post-Covid), there was a lot of attractive yield opportunities. So even though institutions kind of get that bitcoin is a pretty safe [asset] (the ones that are forward-thinking), there’s still so much attractive yield to go after…that it’s a bit challenging to say this is why you should finance bitcoin.&nbsp;



But that’s changing. I think as the interest rates come down a bit, now we’re starting to see more interest because people are a bit worried that they’re not going to get the same yield opportunities they did over the last 24 months.



Blockworks: Why are more traditional finance players beginning to recognize bitcoin as good collateral? Reeds: Obviously <a href="https://blockworks.co/news/tokens-new-era-crypto-regulation">regulatory clarity</a>. But I think specifically on the financial side, people [are] getting smart about how to fit it in in traditional buckets.&nbsp;



Most institutions have rules and allocations as to where they can place capital, and it’s hard for them to just buy physical bitcoin.



What MicroStrategy is doing is really smart in saying, ‘OK well there’s a pool of capital out here that can buy convertible bonds. And there’s another pool of capital here that can be MicroStrategy equity. And if I allocate that appropriately … I can <a href="https://blockworks.co/news/mstr-coin-price-targets">maximize how much</a> I can attract in the markets by sizing it and pricing it accordingly.’



So they’re getting really smart about that, and I think we’re excited to do the same thing on the pure lending side, because we’re spending a lot of time thinking about how we tap into more traditional financial setups.



Read more: <a href="https://blockworks.co/news/cme-data-institutional-crypto-moves">CME data suggests institutions are field-testing new crypto moves</a>



Blockworks: What might be some other outstanding obstacles for institutions looking to get more involved in the crypto space?



Reeds: I think the biggest thing that gets in the way is the information knowledge gap on some pretty basic stuff.&nbsp;



For example, custody is not standardized. The next closest thing is saying these are custodians that the ETFs use. And if the [US Securities and Exchange Commission] has approved them for ETF custodians, then that’s pretty safe and we’re using the same custodians; Ledn uses BitGo.&nbsp;



But there’s no stamp on the custodian that says this is the Grade-A custodian, this is the Grade B. And that’s what [traditional finance] needs; [traditional finance] needs someone else to say this is OK so that they feel OK with it.&nbsp;



So I think we’re forcing them to think about too many things, which is adding friction to the equation. And the same goes with liquidity providers or trading venues.



I think that’s where regulation will help, and just more news. If you can say, ‘OK maybe it’s not regulated, but Cantor [Fitzgerald] did it this way,’ then it adds credibility to the explanation in the way we’re getting it done.



Blockworks: What might be your price prediction for bitcoin long-term?



Reeds: &nbsp;What’s interesting about it is…obviously there are fundamentals around user adoption and numbers like that, but there are no sales forecasts or traditional financial analysis of bitcoin.&nbsp;



So if we push BTC to a price of $250,000, well then $150,000 is a bear market. Every time you have these new lows, then it hits a new step function and we get to the next level. So I don’t think $1 million is unreasonable.



A modified version of this article first appeared in Tuesday&#8217;s Forward Guidance newsletter. Subscribe <a href="https://blockworks.co/newsletter/forwardguidance">here</a> so you don’t miss tomorrow’s edition.



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Ledn CEO details path to crypto-backed lending boom

Katherine Ross

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



We’ve talked about the <a href="https://blockworks.co/news/btc-100k-microstrategy-buy">bullish narrative</a>, we’ve talked about the <a href="https://blockworks.co/news/bitcoin-bull-market-drawdowns">historical possibility of a drawdown</a>, and now, dear readers, let’s talk price targets and analysis.&nbsp;



It’s been a while since we spoke to Ledn’s John Glover to get his end-of-year expectations and the levels he’s watching. Glover uses the Elliott Wave Theory, which is a technical analysis that uses previous price movements to predict future movements.&nbsp;



Basically, if we’ve carved out the high here at just below $100k (last Friday we saw it go as high as $99,800 before falling back) then he’s looking at $125,000. However — and this is the part that might make the big bulls sad — we might not see $100k breached this year.&nbsp;



Glover said his “favorite” move right now (or the one that seems most likely to him) is that bitcoin’s “topped out at these levels, and we&#8217;re going to drop back down to kind of $75,000 to $80,000 and then moving into next year, then we&#8217;ll see that big rally.”



There is another scenario though where bitcoin quickly breaks $100k and climbs up to $125,000. If that happens, we could see the price top out at $160,000.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfrEV34PEeFrhs7JXfkO4-zlMK8Sbt5-kzFkseM0J0O-0AKusZUQxLh58hPErrwhiMEYU4OnPjIFswETXizV0PuMGtoW0i-DVere3ltB-O98pU8Hqz92rhZZLEshBKllQSxpykVTQ?key=OVrdQ2y3ay-pwL5cHIJIjqRq" alt=""/><figcaption class="wp-element-caption">Source: Ledn</figcaption></figure>



But Glover pointed out that he expects to see a decent amount of profit-taking. After all, we’ve seen a $20,000+ jump in bitcoin’s price in just the last few weeks alone and it would be “typical … behavior when you&#8217;ve had such a big move ahead of the real event.”



“So we have the news event, which is [President-elect Donald] Trump getting in. Now the real event is Trump [taking office] and people will take profit ahead of that, waiting to see whether or not that&#8217;s really going to change the regulatory stance of the US and push things forward,” he continued.&nbsp;



The lack of a so-called real news event is also why announcements — like MicroStrategy buying up over $5 billion of bitcoin — didn’t move the needle.&nbsp;



Bitcoin’s pause may be beneficial to the overall crypto environment though.&nbsp;



“We’re seeing a lot of switching from bitcoin into altcoins,” Glover noted. And here’s your reminder, <a href="https://blockworks.co/news/altcoin-season-when-bitcoin-dominance-hits-60">as I wrote last week</a>, HashKey Capital’s Jupiter Zheng expects a “massive altcoin season” when bitcoin dominance peaks.&nbsp;



Glover does think that the final move up — whether it’s to $125,000 or $160,000 — could end this iteration of the bull run and would be followed by a correction.&nbsp;



“Now, that correction isn&#8217;t going to take us back down to $20,000. I think if we get that correction from $160,000 we probably correct down to $115,000. If we get it from $125,000, we correct down to $95,000 or something … I think that somewhere in 2025-2026 we will finish this [bull run],” he said.



Can you even believe we started this year at around $40,000?



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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Price targets to watch as bitcoin struggles to hit $100K

David Canellis

Today, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">Vibe check&nbsp;</h2>



The vibes are…weird.



Both bitcoin and ETH are down over 4% this morning according to Coinbase. Bitcoin’s clinging to $56,000 while ETH holds on to $2,300.&nbsp;



If you asked Ikigai’s Travis Kling, he’d say that there’s a new attitude taking over in crypto: “Pervasive quiet quitting.”



Yes, the quiet quitting concept that went viral a few years ago, where folks just stop doing more than what was expected of them. It was labeled as giving up — though I think we can agree that perhaps it’s a situational thing, and you don’t always need to go above and beyond without proper compensation… but I’ll hop off my soapbox now.



Kling, however, is much more focused on the engagement part of the quiet quitting trend.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">What I’m seeing and hearing is that a meaningful swath of the crypto community is simply much less engaged than in prior years. And they are much less engaged because there is much less belief in the potential of crypto projects to solve real world problems and gain significant…&mdash; Travis Kling (@Travis_Kling) <a href="https://twitter.com/Travis_Kling/status/1830981131526709731?ref_src=twsrc%5Etfw">September 3, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“Crypto enthusiasts cannot see what is going to drive the next big leg up. No DeFi summer. No NFT summer. Gaming is currently DOA. Metaverse turned out to be a complete joke. Decentralized social media has flatlined. People are trying to get excited about crypto x AI, but I (along with many others) think that excitement is likely misplaced (at least thus far),” he wrote.



Sound familiar? <a href="https://blockworks.co/news/empire-newsletter-summer-market-madness">Threads of this</a> have certainly made their way into our reporting here on Empire this summer. David, for example, has been trying to use data to see when or if we could see the <a href="https://blockworks.co/news/empire-newsletter-memecoin-launches">altcoin market</a> pick up.



“Things continue to be really range bound and relatively quiet, which is interesting to me, as we come out of summer, that we&#8217;re still experiencing these kinds of quiet markets. I guess maybe people are waiting for elections,” Ledn’s John Glover told me.



To put it quite frankly, folks are struggling to see a catalyst on the horizon. Pair that with the seasonality factor that <a href="https://blockworks.co/news/on-the-margin-newsletter-ism-pmi-goods-disinflation">September tends not to be bitcoin’s month</a> (though Glover would tell you that he’s not so sold on that type of historical read, given all of the changes bitcoin’s gone through).&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Even if the token price goes down 85% from listing, the early VCs are still up multiples on their money. This is a dominant feature of the current Alts market structure. The crypto market has allowed VC’s to return their funds (and raise new ones) based on investments that never…&mdash; Travis Kling (@Travis_Kling) <a href="https://twitter.com/Travis_Kling/status/1830981153907527874?ref_src=twsrc%5Etfw">September 3, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



But Glover does think that bitcoin breaking out of its funk could act as a rising tide for all of our crypto boats.&nbsp;



“Once we start to see some upward momentum in bitcoin. I think everything&#8217;s going to come higher with that. I don&#8217;t think it&#8217;s just going to be bitcoin. I think you could be pulled alongside that as well. I think it&#8217;s what&#8217;s going to spur on that appreciation in bitcoin prices. I&#8217;m still not certain what&#8217;s going to cause that, because we have seen a bunch [of] hodler wallet addresses…adding,” but that move probably won’t come until bitcoin tops $73,000.



As for when it could happen, that’s still anyone’s game. But it might not be dead ahead on the horizon, given that open interest on CME declined last week, which points to a reduction in long exposure, per K33.&nbsp;



“BTC futures premiums declined to 6.5%, its lowest reading since January 15, 2024,” the analysts added.&nbsp;



“So far this cycle, we haven’t even come close to bringing in the number of new people we have in prior cycles (new ETF investors excluded),” Kling pointed out, adding that this could be a bottom signal.&nbsp;



Despite the murkiness, there are still ranges to watch, Glover said, the bottom levels for bitcoin and ETH sit at $49,000 and $2,100 respectively. If a rising tide floats all boats….well, you get the picture.



While this may not be my most positive read so far, the silver lining here continues to be stablecoins, which sit at a total market cap of $169 billion per DefiLlama <a href="https://defillama.com/stablecoins">data</a>.



Wake me up when September ends.&nbsp;



— Katherine Ross



<h2 class="wp-block-heading">Data Center</h2>



<ul class="wp-block-list">
<li>The total crypto market has shed 5% over the past day, now at $2.07 trillion capitalization, per CoinGecko.</li>



<li>RUNE and TON are worst-off after slipping by 11% and 12% apiece.</li>



<li>HNT and XMR are bucking the trend, gaining over 10% in the past week.</li>



<li>399 pairs have been created through the new Ethereum memecoin launchpad Ethervista since its launch on August 31. Total inflow <a href="https://dune.com/0xtoolman/ethervista-metrics">volume</a>: $91.4 million.</li>



<li>DAO <a href="https://deepdao.io/organizations">treasuries</a> are currently valued at under $20 billion, down from $42.5 billion at the March top.</li>
</ul>



<h2 class="wp-block-heading">God forbid crypto has hobbies</h2>



Crypto has a few traditions going for it.&nbsp;



Companies and startups regularly wage war with the SEC. The degens pump obscure digital novelties to sky-high valuations. And, after practically every all-time high, token prices collapse by 80% or more.



It isn’t just the shitcoins carrying that particular torch. Bitcoin has retraced by that amount (or more) three times since 2017 and ether has done it twice, although the latter has been much quicker about it.



Bitcoin usually bottoms out between 350 and 400 days after peaking, while ether has done it in just over 200 at the shortest and under 350 days at the longest.&nbsp;



The chart below shows bitcoin and ether corrections after local peaks across the past few cycles. We’re currently at around 200 days since the pico top.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcXV_IVM0nFd9bQUYzSWjW50_4LadHXB9tAgYS-uCbYLUIEBlCLzaWa4NDIpQ_TQt8myL4xSgdY5DU5f6w1yjSBCmeg1RZmalGP4C4iLY9AfXcNdkJYlhIkfb4LcvITMe01VXmbyalemu8sdGXVrfYl78ve?key=jj_HMR3HLJ-G204VfS1fkQ" alt=""/><figcaption class="wp-element-caption">Notice that ether has already retraced by 40% from this cycle’s peak </figcaption></figure>



The real trick is bouncing back even stronger from these sustained corrections. The list of top 200 or so cryptocurrencies is littered with tokens that never returned to record highs — including even ether and sol.



This next chart plots tokens that made it to one’s that are still fighting over the past seven years. SOL, ETH and MATIC are the faded lines in the back. Those made it between cycles, even though MATIC is now struggling by comparison.



In the front are former top 10 cryptocurrencies that have largely missed out: IOTA, DOT, EOS and DASH.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdITVM8115edC3ZlfeVRohT9nqTFZJ6ZlgUm8fhanzeR-xy5YhpfGxSG4Sas1twKbGLSIZSzF4RU3LCD4cwP5vXOXOhyzKBai2jsmai_f_SnzUtYi_bYg7ylkv0jkiTiMpMDSISidOdgJtzu05QlxD73hgz?key=jj_HMR3HLJ-G204VfS1fkQ" alt=""/></figure>



All this is a reflection of crypto’s volatility. Cryptocurrencies may or may not run back their 80% corrections, but either way, they’re —&nbsp;apparently —&nbsp;pretty much inevitable.



This next chart sorts top cryptocurrencies by the date they last reached all-time high. Each dot is a different token, and they obviously concentrate around the tops of the past three cycles, in 2018, 2021 and 2024.



Dots to the right of the chart hit record highs most recently, while the ones on the left were much longer ago.&nbsp;



And coins gathered at the top have corrected the most — those at the very edge have lost practically all of their value compared to their all-time highs.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfPKnh0W0CJhgnBm7ZYxwaa352s3PEJeaXw971RwK_gwtQZEk71J2xbbEX1zQ18MWil1yBVAerWcpv2YpX5q-3nsHLB42YryjCYjzpx6FJAf_gtVoYsTE27JNp666igdcs5x8VcmI2EPcgmmWAU7OxzbXM?key=jj_HMR3HLJ-G204VfS1fkQ" alt=""/></figure>



More than a dozen of the analyzed cryptocurrencies that set price records this cycle have already had their 80% drawdowns, including AEVO, STRK, WLD, W, ENA, DYM and DYDX.&nbsp;



Even more have lost over 60%.



As is tradition.



— David Canellis



<h2 class="wp-block-heading">The Works</h2>



<ul class="wp-block-list">
<li>The Trump-backed World Liberty Financial project will be built on Aave and the Ethereum blockchain and will include decentralized borrowing and lending, CoinDesk <a href="https://www.coindesk.com/business/2024/09/03/inside-the-trump-crypto-project-linked-to-a-2m-defi-hack-and-former-pick-up-artist/?_gl=1*1a4c07f*_up*MQ..*_ga*MTY4MTkxMDI0Ni4xNzI1NDUxMjQ5*_ga_VM3STRYVN8*MTcyNTQ1MTI0OC4xLjAuMTcyNTQ1MTI0OC4wLjAuMTE2OTE2OTA2OQ..">reported</a>. </li>



<li>Tiffany and Lara Trump had their X accounts locked down after both were <a href="https://www.bloomberg.com/news/articles/2024-09-04/trump-relatives-are-hacked-on-x-with-fake-crypto-announcement">hacked</a> and falsely promoted the World Liberty Financial project.</li>



<li>Ripple’s Brad Garlinghouse said his company is <a href="https://www.theblock.co/post/314585/ripple-very-close-to-launching-new-stablecoin?utm_source=rss&amp;utm_medium=rss">not interested</a> in going public in the US. </li>



<li>Matter Labs cut 16% of its workforce Tuesday, Blockworks <a href="https://blockworks.co/news/matter-labs-layoffs-incoming">reported</a>.</li>



<li>TradFi companies are interested in transacting in bitcoin, Cantor Fitzgerald CEO Howard Lutnick <a href="https://x.com/howardlutnick/status/1831080474124681316?s=46">said</a>.</li>
</ul>



<h2 class="wp-block-heading">The Riff</h2>



Q: Which pseudo-indicator are you looking at?



The only one that matters: the frequency of “gm” tweets from former Binance CEO Changpeng Zhao.



Zhao, who is still in custody until the end of this month, hasn’t tweeted “gm” since December 4, 2023 (and not at all since a few weeks before he checked into prison in June).



Bitcoin traded for $42,000 before Zhao’s last “gm” and would go on to rally up to 80% over the next few months.



We already know how bullish a Zhao gm can be — bitcoin has <a href="https://blockworks.co/news/cz-tweets-gm-bitcoin-goes-up">gone up almost every time</a> after those posts.&nbsp;



Calling it now: No god candle until Zhao shares his next “gm.”



— David Canellis



If we’re answering seriously, then I’m keeping an eye on the potential lows for bitcoin and ETH (especially as ETH hangs around $2,300).&nbsp;



If I were to have a little fun with it, then I’d say I’m teaching myself all about astrology thanks to Lexi Wangler of Mysten Labs.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">daily reminder <a href="https://t.co/r9MhPlyd0P">pic.twitter.com/r9MhPlyd0P</a>&mdash; Lexi Wangler (@lexiwangler) <a href="https://twitter.com/lexiwangler/status/1831022444305318156?ref_src=twsrc%5Etfw">September 3, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Is crypto in retrograde? Do we need to keep an eye on what moon we’re in? These are all important questions to ask.&nbsp;



I, like Glover, take the historical data with a grain of salt at this point, but the smaller indicators like CME open interest make me think that perhaps some traders are reading into something (or maybe they’re farther along in their astrology studies and can better predict what’s about to happen).&nbsp;



— Katherine Ross&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Is ‘pervasive quiet quitting’ crypto’s latest trend?

The German government’s been quite busy raking in some cold hard cash as it seeks to offload portions of its bitcoin stash.&nbsp;



While analysts have been warning about the potential impact of the Mt Gox repayments, the German government’s moves came as a bit of a surprise to some.



However, the selling from the German government isn’t enough, at this point, to put a stop to John Glover’s bullish attitude. The chief investment officer of Ledn thinks that bitcoin could top $80,000 — if not higher, with other analysts calling for $100,000 — by the end of the year.&nbsp;



That might not stop bitcoin from another slide lower, though. He reiterated that he’s watching the $55,000 to $56,000 level, as we previously reported. If it falls further, then keep an eye on $49,000.



Read more: <a href="https://blockworks.co/news/mt-gox-bitcoin-final-boss">Bitcoin bulls meet their third final boss after US and Germany: Mt. Gox</a>



“And you know, it is a significant amount of bitcoin that&#8217;s hitting the marketplace. You know, 140,000 or whatever that number, is going to be a lot. But as we talked about before, who knows how much of that is actually going to get sold?” Glover said. Even prior to <a href="https://blockworks.co/tag/mt-gox">Mt Gox</a>, the price action “couldn’t break and make new highs.”



“We went up to that $73,000, we dipped off to the mid-60s. We tested $72,000, then dipped off mid-60s, tested one more time, and then came up. Anyone who was long from that March rally from $35,000 up to $73,000…I can see when there are three failed attempts to make new highs, they&#8217;re going to start thinking about taking profit,” he added. So long as they don’t have diamond hands, of course.



Keep in mind that we’re in the dog days of summer as well. For traditional markets, that generally means lower volume. Glover thinks that the entrance of so many institutional investors means that the trend is carrying over to crypto markets as well.



“The one thing that I found interesting in the last 24 hours of trading is that volumes didn&#8217;t jump up. I was kind of thinking that with the volatility we saw from $57,000 to $54,000 back up again, we would have seen some pretty decent increase in volumes. We didn&#8217;t see that. And that makes me slightly nervous because you tend to see a spike in volumes at bottoms and up tops. And we didn&#8217;t see a spike in volume, even though we went down and made a new kind of recent low. So that makes me a little bit nervous that maybe we haven&#8217;t seen the bottom yet. But again, it&#8217;s hard to say,” Glover said.&nbsp;



The German government’s selling, however, muddies his read a little bit. Though, he thinks that the move makes sense.



“I mean, that was a significant amount of bitcoin that they supposedly sold in the last 24 to 48 hours. Interesting to me that they&#8217;re doing it. But you know, when you look at every government being cash-strapped, it&#8217;s not really surprising,” he said.&nbsp;



In total, he estimates that $25 billion worth of bitcoin has been repossessed by governments, which is just another overhang to keep in mind because governments are going to seek to monetize those holdings.&nbsp;



Given that the market is trading roughly $30 to $40 billion a day in bitcoin alone, that kind of selling can be absorbed, he added. So far, the German government’s offloaded roughly $2 billion, <a href="https://blockworks.co/news/germany-bitcoin-stash-exchange-transfers">per Blockworks’ David Canellis</a>.



Looking at the chart over the past week, it’s clear that most of the selling is happening during the Asia/Europe hours — which makes sense given both Mt Gox and the German government — but there’s buying interest when the US starts to log on.



“That&#8217;s what we&#8217;ve seen the last couple of sell-offs. It&#8217;s been late European, early Asian sell-off, and then the US comes in and starts buying it back. So I think there&#8217;s the overhang from Mt Gox in Asia, and then there&#8217;s the desire for traditional finance players to add to their portfolios on dips. So that kind of makes sense [with] what&#8217;s happening here. It&#8217;s just who&#8217;s going to win this battle between the bears and the bulls is a little bit tough,” Glover said.



A shorter version of this article first appeared in Tuesday’s Empire Newsletter. Sign up <a href="https://blockworks.co/newsletter/empire">here</a> to never miss an issue.



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Has bitcoin carved out the low? 

Shalini Nagarajan

<div id="highlights-block_62aaed53cdd11" class="highlights">
 <ul>
 <li>Citigroup will also advise on offers, including Nexo’s bid to buy some of Celsius’ assets</li>
 <li>Abrupt user withdrawals echo the Mt. Gox meltdown in 2014, a crypto exec told Blockworks</li>
 </ul>
 
</div>



After freezing user accounts on Sunday, <a href="https://cms.blockworks.co/tag/celsius/" target="_blank" rel="noreferrer noopener">Celsius</a> has recruited Citigroup to advise the crypto lender on its next steps.



Celsius has brought on the bank in an advisory role, <a href="https://www.theblock.co/post/152230/citigroup-celsius-advising-after-withdrawal-freeze" target="_blank" rel="noreferrer noopener">The Block</a> reported on Wednesday. While Citigroup won’t directly provide any funds to Celsius, it will lay out possible financing routes, the report said.



In addition to its advisory role, Citigroup will reportedly help Celsius evaluate offers, including one made by rival lender Nexo, which formally approached its competitor to buy some of its distressed assets, at the time Celsius signaled liquidity issues. 



Nexo <a href="https://cms.blockworks.co/nexo-knew-celsius-was-in-trouble-before-lenders-withdrawal-freeze/" target="_blank" rel="noreferrer noopener">told Blockworks</a> it was aware Celsius had trouble with its withdrawal obligations and its findings pointed to the “unsustainability” of its business, even before the lender publicly admitted to it.



Celsius’ move to pause user withdrawals and transfers due to “extreme market conditions” triggered a fearful crypto market sell-off reminiscent of Mt. Gox’s catastrophic <a href="https://www.reuters.com/article/us-bitcoin-mtgox-bankruptcy/mt-gox-files-for-bankruptcy-hit-with-lawsuit-idUSBREA1R0FX20140228" target="_blank" rel="noreferrer noopener">bankruptcy</a> in 2014, said Youwei Yang, director of financial analytics at StoneX. At the time, the Tokyo-based crypto exchange lost about 850,000 bitcoin in a hack, leading to the firm’s collapse.



In a <a href="https://blog.kaiko.com/celsius-reaches-boiling-point-c9b258f4474f" target="_blank" rel="noreferrer noopener">report</a> Wednesday, crypto research firm Kaiko said Celsius suffered from a combination of poor risk management, bearish market conditions, and overexposure to stETH (<a href="https://cms.blockworks.co/will-lido-staked-ether-trigger-the-next-big-crypto-crash/" target="_blank" rel="noreferrer noopener">staked ether</a>, a derivative of ether locked in the Ethereum Beacon Chain), which drove the firm into a “Lehman-esque” position.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Even if they do survive this onslaught, I don’t see how anyone can trust the likes of Celsius to keep their assets safe going forward,” Conor Ryder, research analyst at Kaiko, wrote.</blockquote>



Citigroup declined to comment, while Celsius didn’t respond to a request for comment by Blockworks. On Wednesday, Celsius CEO Alex Mashinsky did <a href="https://twitter.com/Mashinsky/status/1537147449088872449" target="_blank" rel="noreferrer noopener">post a brief note</a> on Twitter — his first since his company suspended withdrawals — thanking the Celsius community for their patience.



Citigroup’s appointment wouldn’t be a new one for the crypto lender. The bank reportedly advised Celsius on taking its bitcoin mining subsidiary business public. In May, the network <a href="https://www.prnewswire.com/news-releases/celsius-network-announces-confidential-submission-of-draft-registration-statement-by-bitcoin-mining-subsidiary-celsius-mining-llc-301547547.html" target="_blank" rel="noreferrer noopener">submitted</a> a confidential S-1 draft registration for the subsidiary’s initial public offering — expected to become effective after the SEC’s review.



<h3 class="wp-block-heading">Prospects for reorganization</h3>



Celsius has also <a href="https://cms.blockworks.co/celsius-lawyers-up-following-account-freeze-liquidity-crunch/" target="_blank" rel="noreferrer noopener">tapped</a> Washington, DC-based law firm Akin Gump Strauss Hauer &amp; Feld to explore potential financing options from investors, the Wall Street Journal reported.



Dane Lund of DeFi Alliance sees that as a move to head off potential small claims court actions from its customers, which would become impossible if the company files for bankruptcy protection.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Yesterday, the WSJ reported that Celsius engaged Akin Gump for restructuring advice. This tells unsecured creditors that efforts to seek judgments in court are unlikely to unlock liquidity soon enough to beat the automatic stay.&mdash; Dane Lund (@lund_dane) <a href="https://twitter.com/lund_dane/status/1537091805061296130?ref_src=twsrc%5Etfw">June 15, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The chaos triggered by Celsius is proof that not all lending platforms are equal, according to Mauricio Di Bartolomeo, cofounder of Canada-based crypto lender Ledn.



Clients will be further incentivized to ask the right questions to gain more information on how the yield they are paid is generated, he told Blockworks. “If they are not satisfied with the answers they receive, they could proactively choose to withdraw their assets or close their loans at that particular platform,” he added.



When asked how sustainable companies in the crypto lending space are, Bartolomeo said the models used to generate yield by each vary widely, and it would be unfair to characterize them under the same umbrella.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“There are significant differences in the risk management policies and in the yield generation strategies being employed by the various lenders,” he said.</blockquote>



“Those lenders who took significant risks [such as] generating yield in DeFi with their depositors’ assets, lending uncollateralized to low credit quality borrowers, taking directional market risk with client assets may be finding themselves in some trouble now,” he added.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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