The Bad News Bears

Fed hikes rates 75 basis points, equities slide, and potential liquidation issue in crypto.

June 17, 2022

The Federal Reverse announce Wednesday that there will be a 75bps rate hike due to the rapid increase in inflation. While stocks rebounded off the news, the selloff continued with the Nasdaq falling 4.08% on Thursday and down almost 10% this week.

Interest Rate Volatility

In anticipation of the Fed meeting, 10 Year treasury rates exploded higher hitting a high of nearly 3.50%. 

After the Fed announcement we saw a sharp pullback as the market still looks to find clarity within the economy. Yields have been spiking the entire year with the 10 year starting 2022 off at 1.50%. Currently, it's up over 100%.

Many wonder if the rate hikes by the Fed will send the economy into a recession. Jerome Powell commented on the topic saying , "We’re not trying to induce a recession now, let’s be clear about that". YahooFinance 

Market Update

Monday and Tuesday of this week showed no mercy for investors. We saw a comeback Wednesday, and then we finished where we started to end the week. 

Index Losses in the Last 5 Days in the Market:

  • Nasdaq: 9.43%

  • Dow Jones: 7.27%

  • S&P 500: 8.74%

Liquidations on the horizon?

It's still unsure where all Celsius assets are located and how much is owed, but on chain analysts are watching their wallets closely. We approach the 5th day and users still have no access to withdraw their funds.

As Bitcoin fights to hold above $20,000, there are growing concerns of a crypto fund known as Three Arrows Capital. First reported by TheBlock, 3AC has already been liquidated of $400 million due to growing losses. Some of their main holdings have spiraled downhill including Ethereum, Avalanche, and Polkadot. 

Growing monthly losses per CoinMarketCap

  • Bitcoin: 32%

  • Ethereum: 40%

  • BNB: 27%

  • Solana: 25%

  • Avalanche: 35%

Friday morning the  crypto lending platform, Babel Finance suspended withdraws. This comes after raising $80 million in a series B funding last month, valuing them at $2 billion. CoinDesk 

Fears have started to rise, not about falling prices, but solvency issues on these platforms. Users worry if they'll ever be able to withdraw their funds and are looking for answers from the platforms, which have been quiet for the most part.