When 3AC or Three Arrows Capital declared bankruptcy, it defaulted on Voyager’s (VYGVQ) massive loan. This forced Voyager, a cryptocurrency platform, to file for bankruptcy as well. The month before on June 12, 2022, Celsius suspended withdrawals. It later filed for Chapter 11. Celsius went from a $3.25 billion round of funding in October 2021 to a $1.19 billion deficit upon bankruptcy filing.
The non-stop negative news sent Bitcoin to a low near $18,000 on June 18, 2022, albeit briefly. The brevity of the drop hinted at a Bitcoin rally. In July, Bitcoin overcame the negativity by trading near $24,000. The widely followed crypto does not get the full credit for the rebound. Nasdaq rose by around 10%. The S&P 500 (SPY) gained nearly 8%.
The stock market’s rally overcomes the bigger overhang of the Federal Reserve fighting inflation. Speculators swung from fear to overconfidence that the Fed’s 75 bps hike in July is the peak. The Fed’s next meeting is not until September. This implies the central bank will do nothing for two months.
The markets perceive a lack of Jerome Powell’s supervision of stock markets. This is a flawed assumption. The Fed could have an emergency meeting if inflation figures rise again to 9.5% - 10%. This will hurt leveraged players in the crypto market and could send Bitcoin sharply lower. Below $18,000 is a possibility.
