The Rollercoaster Ride of Bitcoin: What’s Happening in the Crypto Market?

What Happens When Bitcoin Takes a Nose-Dive?

In a dramatic twist of the crypto rollercoaster, Bitcoin (BTC) lost its grip on the vital $28,000 support on June 12. Trading floors turned somber as macroeconomic clouds darkened with dire financial forecasts. The United States Treasury 2-year note yield soared to 3.10% on June 10 – a level not seen since the dark ages of December 2007. With inflation looming like that stubborn guest who never leaves the party, traders demand higher rates to pad their wallets.

Mortgage Madness and Market Mayhem

Louis S. Barnes, a senior loan officer at Cherry Creek, painted a bleak picture following the U.S.’s highest inflation rate in 40 years: there were literally zero buyers in the mortgage-backed securities (MBS) markets. Imagine a buyer’s market so bad that it’s practically a ghost town. “Stocks are down 2% today,” said Barnes. “But they would be down a hell of a lot more if we considered what a complete freeze on housing means.” The tension is palpable – it’s like waiting for the other shoe to drop at a very awkward gathering.

Leverage Alert: MicroStrategy and Celsius on the Brink

Worry not, crypto enthusiasts, there’s more fun in store! MicroStrategy’s high-stakes game of Bitcoin poker is raising eyebrows, particularly regarding its whopping $205 million Bitcoin-collateralized loan with a certain bank. This interest-only loan issued on March 29, 2022, has set the stage for a drama that even HBO couldn’t script. According to Microstrategy’s CFO, if Bitcoin dips to $21,000, they might need another barbecue of margin calls. Cue the gasps!

Celsius: The High-Stakes Poker of Crypto

Celsius, a major crypto lending platform, made headlines by pulling the plug on network withdrawals on June 13, triggering a domino effect of speculation surrounding its insolvency. Just when you thought it couldn’t get worse, users with low collateral ratios are now faced with a gastronomical dilemma: deposit more cash into a frozen service or risk being liquidated. The crypto apocalypse is neigh! Nick Neuman aptly expressed, “Woof.” We couldn’t have said it better ourselves.

Futures Market: The Yellow Light of Caution

When Bitcoin’s futures market begins to flirt with bearish territory, traders might want to check their safety belts. On June 13, the futures market premium dipped into the negatives, a telltale sign that bearish sentiment is lurking around like an unwanted ex. In a healthy market, three-month futures usually perform at a 4% to 10% premium. Now? It’s limping along at a mere 1% – the lowest since April 30 – which is about as reassuring as a Hollywood ending.

Options Pricing: The Fear Factor Revealed

To further prove that crypto trading has hit a rough patch, Bitcoin’s options pricing deserves your attention. The 25% delta skew, a popular barometer for market mood, peaked at 26.6 on June 13, signaling an unprecedented level of fear in the market. Think of it as the world spinning on its axis – unusual even for March 2020 when Bitcoin dipped south of $4,000. Until this skew chills out and falls to neutral territory, buying the dip may just feel like reaching for that cookie at the back of the jar – tempting but risky!