Bitcoin - Week 48 (BlockFi)

The dominoes keep falling one after another. After Terra-Luna, Celsius, 3AC, Voyager, FTX, now comes BlockFi’s turn. And meanwhile, inflation continues to break records.

Domino BlockFi

Based in the state of New Jersey, BlockFi primarily catered to small investors looking to borrow dollars. It was enough for that to bring bitcoin or shitcoins as collateral. Loans were obtained in minutes, with no credit checks on borrowers.

The unmentionable strategy is obviously to wait for the loss of value of shitcoins to cause margin calls. BlockFi could then liquidate its customers and rack up juicy fees along the way.

The lender recently claimed to have more than 650,000 individual customers, also attracted by the tempting remuneration of deposits. BlockFi was therefore also investing its customers’ money. And in particular at Three Arrows Capital (3AC) which went bankrupt following the implosion of the Terra-Luna ponzi.

Leaked documents suggest the firm managed to lose $285 million during the latest bull run:

“Leaked document shows #BlockFi has lost over US$285,000,000 in the last two bull market years. »

BlockFi had been successful in to secure a credit facility with FTX ($400 million). Unfortunately, FTX has gone bankrupt in the meantime… In this regard, do not miss the paper: “We must save the SBF soldier”.

BlockFi’s bankruptcy filing reveals liabilities of between $1 billion and $10 billion. We don’t know the exact number.

On the other hand, we know that the company owes money to more than 100,000 entities (including the US government…) and that its liquid assets represent only 256 million dollars in cash.

the FinancialTimes reports that the lending platform has just sued FTX to seize its Robinhood shares. These represent 575 million dollars.

In short, the maximalists were right and many are joining our ranks. Over 200,000 BTC left Coinbase in the last four days of the past week. Not your key, not your coin!

There is no magic. Only bitcoin and rug pulls promoted by influencers deserve to go to jail.

cold winter

Despite appearances, the worst is yet to come. So wrote The Economist last week about the European energy crisis. “A serious economic crisis will test the strength of Europe from 2023”, writes the British magazine.

Admittedly, gas stocks are currently 95% full, and a whole fleet of tankers filled to the brim are circling off the European coast.

Nevertheless, the natural gas that will be delivered during the first quarter of next year sells for around 125 euros per megawatt hour (MWh). While its normal price is usually around 20 euros…

Admittedly, wholesale electricity prices in Germany have fallen from €800/MWh in August to less than €200 this week. But we were at 20 euros before the war took hold of Ukraine. In Cologne, the supplier RheinEnergie will charge electricity twice as much for private individuals from January.

There will probably be no shortages, but at what cost? Energy-intensive industries (aluminum, fertilizers) no longer work. And this, even as Russia continues to sell us gas!

Between January and October, European countries imported 18 billion cubic meters of Russian liquefied natural gas (LNG). An increase of 42% compared to the same period in 2021, reports the FinancialTimes.

Added to all this is the fact that the old continent and the United States intend to strengthen their sanctions soon. Their insurance companies (which cover 90% of the global shipping market) should stop insuring ships carrying Russian naphtha. Unless the latter was purchased under a certain ceiling price.

That said, China and India, which have absorbed most of Russia’s surplus barrels so far, can self-insure their ships.

Russian Energy Minister Alexander Novak warned that Russia will not supply countries that bow to the dictates of the West. “A cap could lead to oil shortages”did he declare.

Russia could indeed reduce its exports by several million barrels per day. Not to mention OPEC, which could add fuel to the fire when the price of a barrel is already fluctuating between 80 and 90 dollars.

A prolonged return above $100 would risk blowing up the Western financial system and causing hyperinflation in the process.

This Great Reset unfortunately seems to take a little more shape with each passing day:

“Scholz – at the SPD party conference: It is increasingly clear that Russia not only cannot win this war, but will not win it. »

Especially since the only LNG gas available in sufficient quantity to supply Europe will only be delivered from 2026…

The future looks so inflationary that former IMF pundit Olivier Blanchard recommends in the FT that central banks raise their inflation target to 3% per year.

Glassnode Weekly Report Summary

The plebs continue to accumulate! Entities holding less than 1 BTC are taking advantage of balances by adding more than 96,000 BTC since the collapse of FTX. They now hold over 1.21 million BTC, an all-time high. That is still 6.3% of all of the approximately 19 million bitcoins in circulation.

Number of bitcoins held by all entities with less than 1 BTCSource: Glassnode
Number of bitcoins held by all entities with less than 1 BTCSource: Glassnode

Other interesting metrics include latent bitcoiner losses. They currently account for 56% of bitcoin’s market capitalization.

In other words, you are not alone in having to hunker down during this necessary purge of shitcoinery. Hodl!

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