{"id":1605,"date":"2022-07-18T04:50:00","date_gmt":"2022-07-18T04:50:00","guid":{"rendered":"https:\/\/prendergast.net\/?p=1605"},"modified":"2022-07-18T04:50:00","modified_gmt":"2022-07-18T04:50:00","slug":"bitcoin-holds-2022-lows-as-inflation-soars-and-more-troubled-crypto-companies-emerge","status":"publish","type":"post","link":"https:\/\/prendergast.net\/?p=1605","title":{"rendered":"Bitcoin Holds 2022 Lows as Inflation Soars and More Troubled Crypto Companies Emerge"},"content":{"rendered":"

Bitcoin Holds 2022 Lows as Inflation Soars and More Troubled Crypto Companies Emerge<\/strong><\/span><\/h1>\n

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Another month, another red-hot inflation data. As of Wednesday 13th, July, the consumer price index (CPI, a key measure of U.S. inflation) was up 9.1% from a year earlier. Meaning shoppers are paying significantly more for everything from groceries, gasoline and rent. The higher-than-expected reading immediately spooked cryptocurrencies and stocks, as Bitcoin plunged 5% and the S&P 500 opened by 1%. The liquidity crisis plaguing crypto firms; Three Arrows Capital<\/a> and Celsius<\/a> continued to spread across the market. Well, it hasn't been all bad news for the crypto sector. Let's dive into the water.<\/span><\/span><\/p>\n

Four decades of high inflation and the Fed's efforts to combat it are weighing on stocks and crypto markets and sparking fears of a recession. Consumer prices rose 9.1% in June from a year earlier, beating Dow Jones's 8.8% forecast. The most significant inversion of the yield curve between 10-year and 2-year Treasury bills (a key indicator of a recession) occurred since 2000<\/a>. The latest inflation report<\/a> could mean another rate hike is on the horizon for the Federal Reserve, which has accelerated efforts to unwind pandemic-era stimulus. Riskier assets such as cryptocurrencies and tech stocks have benefited from excess consumer cash<\/a> in the past, but have since suffered some of the sharpest losses.<\/span><\/span><\/p>\n

Two months after the Terra\/Luna debacle, liquidity and credit issues continue to plague overstretched crypto firms like Three Arrows Capital (3AC), Celsius, Voyager, and more. A legal battle<\/a> has erupted between the founders and liquidators of 3AC, which manages $10 billion, after it filed for bankruptcy on July 1.<\/span><\/span><\/p>\n

The fallout from 3AC affects Blockchain.com<\/a>. (3AC lost $270 million on loans), Voyager Digital (filed for bankruptcy after 3AC failed to repay $670 million), and BlockFi. FTX CEO Sam Bankman-Fried has since "bailed out" the latter two. Meanwhile, Celsius, one of the first companies to suspend withdrawals due to liquidity issues paid off a huge Defi loan ahead of its bankruptcy filing Wednesday night.<\/span><\/span><\/p>\n

Bitcoin mining companies are also feeling the pinch<\/strong><\/span>.<\/strong><\/span><\/span><\/h2>\n

Despite the fall in cryptocurrency prices, global mining output has remained near all-time highs<\/a> over the past month. Meaning mining energy costs are high even as the value of cryptocurrency block rewards falls. As a result, some miners are selling their cryptocurrency to pay fees.<\/span><\/span><\/p>\n

Core Scientific<\/a>, one of the largest miners in the world, sold $167 million worth of BTC (over 75% of its BTC) to pay off servers and other debts. Canadian miner Bitfarms<\/a> sold $62 million worth of BTC (more than 75% of its BTC) to improve liquidity, and Argo Blockchain<\/a> liquidated $15.6 million to repay Galaxy Digital's loan.<\/span><\/span><\/p>\n

What's the good news?<\/strong><\/span><\/span><\/h2>\n

Regarding global adoption, Italy subsidizes Internet blockchain projects with $46 million<\/a>. The Central African Republic has announced a new national cryptocurrency, Sango Coin<\/a>, whose president says it will be "a gateway to the country's natural resources." portal." Meanwhile, $5.5 billion<\/a> in venture capital flowed into crypto projects in the year's first half. Most recently, Axie Infinity<\/a> developer Sky Mavis raised $150 million for blockchain gaming, and Layer 1 protocol Rubix raised $100 million<\/a> from a company specializing in cross-border transactions.<\/span><\/span><\/p>\n

It's also important to note that Ethereum successfully launched proof-of-stake<\/a> on its Sepolia test net, the second of three milestones ahead of a blockchain energy-efficient upgrade known as Merge<\/a>.<\/span><\/span><\/p>\n

Why this matters<\/strong><\/span><\/span><\/h2>\n

Months into the crypto winter of Bitcoin's 70% drop from its November all-time high, a big question is permeating: Are we near a bottom? While some analysts claim that macro factors<\/a> are crucial like the Fed slowing rate hikes or cutting stock earnings forecasts, others think we're close<\/a> to a bottom. While no one can predict how the crypto market will move, finding a bottom is more than just price levels. As one cryptocurrency trader told CoinDesk<\/a>:<\/span><\/span><\/p>\n

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"The bottom is as much a product of time as the price…Cynical sentiment must die down and give way to optimism."<\/span><\/span><\/p>\n<\/blockquote>\n

The price of crypto has been steadily declining since the beginning of the year. This is a common market trend and seems to be generally accepted. The fall in price is not only concerning for those who invested a considerable amount of money in crypto, but it also affects people who are just curious about it. Although the fall in price may be seen as a negative trend, it also has its own set of benefits.<\/span><\/span><\/p>\n

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Tim Moseley<\/p>\n","protected":false},"excerpt":{"rendered":"

Bitcoin Holds 2022 Lows as Inflation Soars and More Troubled Crypto Companies Emerge                     Another month, another red-hot inflation data. As of Wednesday 13th, July, the consumer price index (CPI, a key measure of U.S. inflation) was up 9.1% from a year earlier. Meaning shoppers are … Continue reading Bitcoin Holds 2022 Lows as Inflation Soars and More Troubled Crypto Companies Emerge<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[592],"_links":{"self":[{"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/posts\/1605"}],"collection":[{"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prendergast.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1605"}],"version-history":[{"count":0,"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/posts\/1605\/revisions"}],"wp:attachment":[{"href":"https:\/\/prendergast.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1605"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prendergast.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1605"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prendergast.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1605"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}