UK government ‘inflaming tensions’ over rail dispute, says TUC

Railway staff will strike on Tuesday, Thursday and Saturday with a 24-hour walkout also planned on the London Underground

Waterloo Station in central London. Services on more than half of the UK's rail network may be suspended next week during three days of rail strikes. 

EPA

Soraya Ebrahimi
Jun 19, 2022

As strikes on the railways and London Underground from Tuesday look set to cause widespread travel disruption, union leaders have accused the UK government of “inflaming” tensions over the dispute.

There will be cancellations and heavily reduced services from Tuesday as workers stage the biggest strike in the industry for more than 30 years in a row over pay, jobs and conditions.

Members of the Rail, Maritime and Transport union (RMT) at public body Network Rail and 13 train operators will strike on Tuesday, Thursday and Saturday, with only about one in five trains running and disruption to services on days following the action.

READ MORE

UK rail strikes will cost tourism and leisure sectors more than £1bn, industry body says

The RMT and Unite are also staging a 24-hour walkout on London Underground which will cause disruption to services.

The union body TUC is calling on the government to adopt a positive role in the dispute, saying it was “inflaming tensions” with comments such as threatening to “revoke” workers’ legal rights.

The TUC said rail workers in Wales have reached agreements with operators on pay and job protections, while in Scotland there are “meaningful negotiations” taking place.

The TUC said ministers in Westminster were insisting on imposing cuts and planning to change the law so that employers can draft in agency workers in during industrial action.

“The government has the power to help end this dispute, but rather than working in good faith to find a negotiated settlement, ministers are inflaming tensions and trying to pitch worker against worker,” TUC general secretary Frances O’Grady said.

Ms O’Grady said no one takes strike action lightly but that rail staff have been left with “no other option”.

“Many rail staff who will be hit hardest — such as caterers and cleaners — are on low and average earnings. It’s insulting to ask them to take yet another real-terms pay cut when rail companies took £500 million ($611m) in profits during the pandemic.


“If these cuts go ahead, thousands of safety-critical and frontline jobs will be lost, with train services at risk, too.

“We need a better vision for the future of rail than commuters packed on unsafe trains like sardines,” she said.

Picture taken with permission from the Twitter feed of Diego Garcia Rodriguez of queues to enter security at London's Gatwick Airport on Tuesday. PA

“Strikes should always be the last resort, not the first, so it is hugely disappointing and premature that the RMT is going ahead with industrial action,” a Department for Transport representative.

“The government committed £16 billion — or £600 per household — to keep our railways running throughout the pandemic while ensuring not a single worker lost their job.

“The railway is still on life support, with passenger numbers 25 per cent down and anything that drives away even more of them risks killing services and jobs.


“Train travel for millions more people is now a choice, not a necessity. Strikes stop our customers choosing rail and they might never return.”
Commuters face travel disruption as London Underground goes on strike — video

Commuters face travel chaos as London Underground goes on strike

Transport Secretary Grant Shapps said the RMT had been “gunning” for industrial action for weeks and accused it of “punishing” millions of “innocent people” who will be affected by the strikes.

“Of course, it is a reality that if we can’t get these railways modernised, if we can’t get the kind of efficiency that will mean that they can work on behalf of the travelling public, then of course it is jeopardising the future of the railway itself,” he told the Sophy Ridge on Sunday programme on Sky.

A representative of the Rail Delivery Group industry body said it was aware of the cost-of-living pressures being felt by workers and their families.

“Every business wants to support their staff and the railway is no exception.

“But, as an industry we have to change our ways of working and improve productivity to help pay our own way — the alternatives of asking taxpayers to shoulder the burden or passengers to pay higher fares when they too are feeling the pinch simply isn’t fair,” the representative said.

The strikes will affect a number of events including the Glastonbury music and arts festival in western England, and London concerts by Elton John and the Rolling Stones, as well as school exams.

Updated: June 19, 2022

UPDATE 1-British minister condemns rail strikes as 'huge mistake'


Sun, June 19, 2022
By Elizabeth Piper

LONDON, June 19 (Reuters) - British transport secretary Grant Shapps has condemned planned rail strikes as a "huge mistake" that will stop people attending hospital appointments, sitting school exams or getting to work.

The action this week comes as British airports experience chaotic delays and last-minute cancellations and as many Britons also face a huge backlog at the office which processes passports.

It also highlights pressures on British households, which are experiencing the biggest cost-of-living squeeze since the 1950s, with rail workers saying they are facing cuts in the value of their pay at a time when inflation is spiralling.

Responding to criticism that the government should step in to try to force an agreement and prevent a strike, Shapps said on Sunday it was for the employers to negotiate with their workers.

"I think this is a huge mistake, unfortunately the unions ... have been gunning for this strike throughout," Shapps told Sky News. "It is disastrous, and it's no way to behave on the railway."

More than 50,000 rail workers will strike on June 21, 23 and 25 in a dispute over pay freezes and job cuts in what the Rail, Maritime and Transport Workers (RMT) union has billed the biggest industrial action in the sector in more than 30 years.

Mick Lynch, general secretary of the RMT, said his union was just looking for a pay rise that reflects the cost of living, but said train operators were making offers "nowhere near that" and he feared thousands would lose their jobs.

The main opposition Labour Party said the government should get involved in the negotiations to try to find a solution.

"This is a government that in 2019 came to power on a promise to level up," Labour's policy chief on tackling regional inequalities, Lisa Nandy, said, referring to a stated objective to reduce regional economic imbalances.

"Instead, what they have presided over is absolute chaos, chaos at the ports, chaos on the railways, chaos at airports, chaos everywhere you go, and that is because this is a government that is not doing its job." (Reporting by Elizabeth Piper; Editing by Louise Heavens and David Holmes)

Thyssenkrupp: now not a good time for hydrogen IPO

Christoph Steitz and Tom Käckenhoff
Fri, June 17, 2022

A logo of Thyssenkrupp AG is pictured at the company's headquarters in Essen


By Christoph Steitz and Tom Käckenhoff

FRANKFURT (Reuters) - Germany's Thyssenkrupp said on Friday it would not pursue an initial public offering (IPO) of its hydrogen division Nucera for now, amid a volatile market that has already delayed numerous listings.

Shares in the steel-to-submarines maker turned negative and fell as much as 2.8% on the news, first reported by Reuters.

The announcement comes as several companies across Europe, including artificial limb maker Ottobock, have pulled the plug on planned flotations, citing market turbulence in the wake of Russia's invasion of Ukraine.

Thyssenkrupp said an IPO still remained the preferred solution to grow Nucera, a 66-34 joint venture with Italy's De Nora, itself an IPO candidate.

"Considering the current stock market environment, Thyssenkrupp has decided to refrain from an IPO of Thyssenkrupp Nucera at this point in time," Thyssenkrupp said in a statement.

Thyssenkrupp had aimed to make a decision on whether to go ahead with stock market listing of Nucera, which plans and engineers electrolysers to produce hydrogen, in the first half of 2022.

It said earlier this year it was targeting proceeds of up to 600 million euros ($631 million) by selling new shares in a possible IPO of Nucera in 2022, betting on the $130 billion hydrogen sector it supplies.

"An IPO remains the preferred option to benefit from the growth prospects of the business as one of the global technology leaders for green hydrogen plant solutions," Thyssenkrupp said.

($1 = 0.9506 euros)

(Reporting by Christoph Steitz and Tom Kaeckenhoff; Editing by Paul Carrel and Mark Potter)

Qantas, Airbus to invest up to $200 million to develop Australian sustainable aviation fuel industry

Jamie Freed
Sun, June 19, 2022

Airbus A350-1000 test plane arrives at Sydney Airport

DOHA (Reuters) -Qantas Airways and Airbus said on Sunday they would invest up to $200 million to accelerate the development of a sustainable aviation fuels (SAF) industry in Australia to help meet the airline's goal of lowering carbon emissions.

The agreement, announced on the sidelines of global airline industry body IATA's annual meeting in Doha, is in line with Qantas' target of using 10% SAF in its fuel mix by 2030 and comes after it placed a multi-billion dollar order for Airbus narrowbody and widebody planes last month.

The global airline industry, aiming to reach net zero emissions by 2050, is relying on SAF usage to rise from around 100 million litres (26 million gallons) a year in 2021 to at least 449 billion litres a year within three decades, a mammoth and costly undertaking.

Qantas is sourcing SAF in London and Los Angeles but not in Australia.

"The problem is there is no sustainable aviation fuel industry in Australia and we would like to buy this in scale," Qantas Chief Executive Alan Joyce told reporters. "We think the way to do that is to put our money where our mouth is."

The investment, which includes A$50 million ($35 million) of funding previously committed by Qantas, could go to a mix of start-up firms and more established operators and could include equity investments, Joyce said.

The funding will be split between Qantas and Airbus with a smaller contribution from Raytheon Technologies-owned engine maker Pratt & Whitney, he added. Qantas has ordered Pratt & Whitney engines for its new Airbus narrowbody fleet.

Airbus chief executive Guillaume Faury said the deal with Qantas was "unique" due to its recent plane order and Australia's isolated location and was not expected to be replicated with other airlines.

The SAF investment partnership will last for an initial five years with an option to extend, the companies said.

Joyce said he hoped it would encourage the Australian government to improve the policy framework and help fund the development of a local SAF industry.

He said Qantas had held promising initial talks with the new centre-left government elected last month.

($1 = 1.4430 Australian dollars)

(Reporting by Jamie Freed in Doha; Editing by William Mallard and Louise Heavens)

BUT IS IT CARBON FREE

Steel Could Soar As The World Transitions To Renewable Energy

Editor OilPrice.com
Sat, June 18, 2022

Steel has a vital role in boosting the UK’s energy infrastructure and help power the transition to a greener economy, argued Severfield chief executive Alan Dunsmore.

The steel boss told City A.M. that the main opportunity in a market defined by challenging headwinds such as inflation and supply chain disruption was in the growth of domestic infrastructure.

He said: “I think the main opportunity is around infrastructure growth and investment, and the transition to green economy, and the investment that will drive. There are a lot of options there in terms of power and infrastructure – particularly nuclear power.”

Severfield is the UK’s largest steel contractor, trading on the London Stock Exchange, and is hoping to benefit from Prime Minister Boris Johnson’s ‘big new bet’ on nuclear.

The government is pushing for the greenlight of eight new reactors by the end of the decade – with Sizewell C receiving its backing for public funds yesterday as part of the government’s new funding model.

Earlier this year, Downing Street unveiled its supply security strategy – targeting a ramp-up in nuclear power generation from 7GW to 24GW over the next three decades – alongside a wider expansion in domestic energy production following Russia’s invasion of Ukraine.

Steel is a key component in the construction of nuclear power plants, and is also used in the production of wind turbines, solar panels, and hydrogen power alongside the North Sea oil and gas exploration and drilling.

Dunsmore concluded: “The green agenda could drive the long-term sustainability and viability of steel, as the product is endlessly recyclable.”

Commenting on current challenges in the industry, he also said the sector has been used to headwinds to navigate over the past five to six years since the UK voted to leave the European Union.

Severfield has sought to reduce its exposure to challenges over the past eight years by expanding its options for producing both raw steel and constructed steel – to ensure it is not overly dependent on anyone supplier.

He explained: “We’ve spent a lot of time just broadening and diversifying our supply options and making sure that we can react to whatever happens,”

Severfield revels in record order book as demand rebounds from pandemic

Dunsmore was speaking with City A.M. following the release of Severfield’s full-year results, which revealed strong revenues and profits powered by a record order book.

Revenues had risen 11 per cent to £403.6m, while underlying profit had also increased 11 per cent to £27.1m, with the company raising its total dividend seven per cent to 3.1p per share.

The firm has navigated the choppy waters of the pandemic, the energy crisis, and Russia’s invasion of Ukraine thanks to a rebounding appetite in construction – enjoying a record UK and Europe order book totaling £486m – up from £393m in November.

Its orders includes a film studio, an industrial centre and the upcoming new stadium for Everton Football Club.

Related: John Kerry: Green Transition Will Be Bigger Than The Industrial Revolution

The company has kept its outlook of £31m in pre-tax profits next year unchanged, with £397m of its hefty order book deliverable in the next 12 months.

Severfield’s expansion into India has also gathered pace, with its order book growing to £158m, reflecting strong underlying demand for structural steel in India

The company has also revealed the successful completion of a new £50m revolving credit facility maturing in December 2026.

Its performance is a bright spot for a troubled industry, with steel rival GFG Alliance’s legal sojourn suffering another setback last week after Sanjeev Gupta failed in his last-ditch attempt to get a winding-up order thrown out after Credit Suisse.

The Swiss investment group started insolvency hearings against the group’s companies last month.

This follows the collapse of Greensill Capital last year – one of GFG Alliance’s biggest backers.

Meanwhile, Business Secretary Kwasi Kwarteng has also been weighing up the possibility of cutting the steel industry out of network charges to help ease the pain of spiraling energy prices.

Harry Philips, investment analyst Peel Hunt, has maintained the investment group’s ‘Buy’ stance, with a target price of 100p.

He said: “Severfield has an evolving strategy that will enable it to be more readily aligned with growth – it has been already but it will become clearer to see; it has developed a good track record with infill acquisitions so more would be a plus; and India is on the cusp of making a significant step forward on the profit line that can accelerate value or partial realization – the latter aspect is simply not reflected in the share price. “

Shares are up to five percent in the company on the FTSE AIM-All Share following today’s results, with the firm trading at 63p per share.

Credit Suisse pays up to redeem A1 bond, sends 'message to the market'

Fri, June 17, 2022,

 Logo of Credit Suisse is seen in Zurich

LONDON (Reuters) - Scandal-hit lender Credit Suisse has opted to tap investors for a pricier dollar bond in order to repay a $1.5 billion capital-boosting issue, a measure investors say was necessary to avoid raising concern over its ability to pay debt.

Credit Suisse's bond issue raised $1.65 billion at a 9.75% interest rate, according to an IFR pricing sheet on Friday. A source familiar with the matter confirmed the details to Reuters.

The bond sold this week, like the one it refinances, is a so-called Additional Tier 1 issue - a type of contingent convertible (CoCo) bond. Deemed to be the most risky debt banks can issue, CoCos are designed to be perpetual in nature, though banks can repay them after a specified period.

It is standard practice for banks to redeem or "call" AT1 instruments at the first opportunity but past exceptions -- notably Deutsche Bank in 2020 - imply Credit Suisse could have done the same, instead of opting to issue another bond at a higher price.

Its new bond pays 9.75%, considerably above the 7.125% interest rate on the previous high-trigger convertible issue.

Some investors said, however, that choosing not to redeem the bond risked raising concerns that the bank might be unable to repay debt as it weathers a turbulent period.

 "The position that CS has been in the headlines over the last year or 18 months, they probably couldn't afford this to go wrong," Dillon Lancaster, portfolio manager at TwentyFour Asset Management, said. "I think the first decision was to do it and I think that's a good one made by management in terms of being bondholder-friendly. And the second one was having the ability to do it, to get the book for the new deal to (refinance) the old deal."

Lancaster estimated that had the original bond not been called, its coupon would have reset at around 8.55%, meaning the new deal cost Credit Suisse roughly 120 basis points more than sticking with the old one.

Devised in the wake of the 2008 financial crisis, AT1 securities aim to bolster a bank's capital buffers and aim to ensure that investors, rather than taxpayers, would be on the hook if a bank ran into financial difficulties.

But while a bank can opt not to call the bond, Deutsche Bank's 2020 decision not to redeem its $1.25 billion in AT1 bond sparked market turmoil.

It followed a similar move in 2019 by Santander.

Filippo Alloatti, head of financials at Federated Hermes Limited, welcomed the decision to redeem the debt calling, saying "it helps Credit Suisse credit spreads to be perceived as a good corporate citizen".

Credit Suisse shares closed 2% higher on Friday following the news, while rival UBS' shares were down.

Credit Suisse also said that redeeming the outstanding instruments helped it to simplify its AT1 capital portfolio. All its AT1 bonds will now be structured to be written off should capital fall below a certain threshold, as opposed to being converted into equity, as was case with the bond now being redeemed.

Some argue too that borrowing costs are likely to increase in coming months as central banks raise interest rates.

Finally, for the bank battered by a string of scandals and profit hits, (the new issuance) was an opportunity to send "a message to the market," one person familiar with the situation told Reuters.

"That Credit Suisse can raise an AT1 for size...and get investors buying Credit Suisse paper."

(Reporting by Brenna Hughes Neghaiwi and Oliver Hirt in Zurich; additional reporting by Yoruk Bahceli in London), editing by Sujata Rao and Louise Heavens)

Bloomberg Businessweek: Ethereum mining is about to disappear, miners are not happy

CoinYuppie • 2022-06-17 10:23 • Ethereum News

The shift from “Proof of Work” to “Proof of Stake” will drastically reduce power consumption and allow some expensive technology to find new uses.



Mikel-Angelo Chalfoun, an ethereum miner, stores his graphics cards in a warehouse in Dubai.

The Ethereum mining community is a diverse group, both geographically and demographically. A 28-year-old translator in Ukraine runs some computing hardware on his balcony to earn cryptocurrency so he can buy clothes and other necessities. In Argentina, a retiree used her gaming computer to double her monthly pension. A college student in Canada has dug up enough money to buy a BMW motorcycle and a modified 2006 Dodge Charger SRT – and pay for gas every month.

Even many outside the blockchain world know that the collapse of the cryptocurrency market has made the past few months quite painful for anyone whose financial situation is tied to a currency. The price of ethereum is down about 70% this year as of June 15. At the same time, a little-known factor (a tectonic shift known as the Ethereum “merger”) will end Ethereum mining entirely, cutting off the income of as many as 1 million people. “It would be a huge economic blow, almost completely depriving the original miners of a good source of income,” the Ukrainian translator said. (He asked to remain anonymous for fear of being robbed.)

Bitcoin and Ethereum, the two largest cryptocurrency networks by market capitalization, both use a procedure known as “proof of work” to record transactions, in which so-called miners use computer resources to solve difficult mathematical problems, converting transactions Blocks are added to the public ledger. Miners receive payment in cryptocurrency as a reward. Bitcoin mining, which usually involves specialized equipment, has been industrialized; as mining has moved to data centers, the participation of ordinary people has largely been eliminated. But Ethereum mining relies on the kind of graphics card found in a typical gaming computer, and many ordinary people can still do it.

Proof-of-work is just a competition to make a computer work hard, which means it uses a lot of energy. The environmental damage it causes is a major criticism of cryptocurrencies by environmentalists. Since the inception of Ethereum, its developers have been preparing to move to an alternative model known as proof-of-stake. Under this system, people would reserve or “stake” a certain amount of ether, the cryptocurrency of the ethereum blockchain, to win rewards for running software that correctly batches transactions into new blocks and checks The work of other validators. Proof of stake can reduce the power consumption of the Ethereum network by about 99%. It would also put miners out of work, which is a major blow given the capital investment to build the business. According to Bitpro Consulting, ethereum miners have already spent about $15 billion on graphics processing units (GPUs), not including ancillary costs such as wiring and transformers.

Prices of Selected Used Graphics Processing Units for Sale on eBay

Average for the previous week??



The ethereum merger is expected to take place in August, although no official date has been given. It has been pushed back many times, and many miners hope this will happen again. “I don’t think they’ll be able to get it done anytime soon,” said Aydin Kilic, chief operating officer of ethereum industrial miner Hive. But others associated with ethereum see a merger as inevitable. “The odds of not happening this year are very low (from 1% to 10%),” said Tim Becco, a computer scientist who coordinates ethereum developers. What I’d like to avoid is someone buys a GPU for mining today, but merges it in Happening this summer, it will make it almost worthless.”

Despite this, miners are actually expanding their operations. GPU prices have more than halved since the start of the year, leading to a surge in purchases. According to data from tracker Etherscan, Ethereum’s hashrate, a measure of the mining power that powers the network, has nearly doubled in the last year. Even with the current depressed cryptocurrency prices, mining Ethereum is more profitable than backing any other major coin, including Bitcoin. “I guess people are trying to get as much as possible before it’s over,” said Slava Karpenko, chief technology officer at 2Miners. The organization helps small miners pool their resources to support Ethereum. The group’s active user count has climbed 70 percent since November, to about 120,000, he said.

However, recovering costs has become more difficult due to the fall in the price of ether. Mike Lam, a 38-year-old engineer from Ontario who has been mining for a year, only made about $5,000 worth of cryptocurrency on his initial $30,000 investment in hardware; he also paid about $650 each. monthly electricity bill. Aaron Petzold, 24, a recent college student who mines ether at his parents’ house in Wisconsin, said he has four months to recoup his investment of more than $28,000. “I want to keep mining until it’s over,” he said. “It’s a big uncertainty. No one really knows what’s going to happen. There’s a lot of people who think I’m obsessed.”



The ethereum merger will likely settle after August.

Miners don’t get nothing. After the merger, their mining rigs will remain powerful computing devices that can be used elsewhere, and some are planning to mine other coins or find other uses for those rigs. After the merger, Petzold is considering using his device as a piece of hardware for digital video production, primarily responsible for rendering, which requires a lot of computing resources. “There are other uses for these cards,” he said. “You can turn it into a render farm, and you can do different machine learning options. They’re just not going to be as profitable as mining.”

Canadian mining pool operator Flexpool is looking to add more tokens for its members to mine and plans to deploy its developers to program other cryptocurrency projects, said a director who asked not to be named for fear of being robbed: “It’s like a company Typewriter companies. When nobody buys typewriters anymore, so you have to use the capital you make on typewriters to move to other businesses.”

Others, like Ivan Zhang, 35, and Karol Przybytkowski, 36, plan to sell their stable of graphics cards and use their facilities in upstate New York to host other miners’ gear for a fee. But GPU prices are expected to drop further as many ethereum miners are likely to rush to sell immediately after the merger. Bitpro plans to stop buying graphics cards within a few weeks, and its CEO Mark D’Aria said: “My view is that no matter how much we pay today, we’re going to make a lot less after this event. We’re just going to sit there and watch Let that happen and pick up the pieces.”

Some miners hope to do better by moving to mining other GPU-requiring coins like Ethereum Classic or Ravencoin. The more miners flocking to any coin, the harder it will be to make a profit. But cryptocurrency breeds optimists, and miners are building for what their business will be a reason to survive. Mikel-Angelo Chalfoun, 30, pays $9,000 a year for a warehouse in Dubai to house and power his 76 graphics cards. He said he would be able to compete with miners at a higher cost. “No matter how cheap crypto gets, no matter how harsh crypto winter gets, I’m fine, I’ll never mine at a loss,” he said.

Other miners just feel betrayed. Canadian engineer Lin said: “They need miners until they merge! It’s a little weird. Ethereum needs us miners until they deprecate us.” (He runs 50 graphics cards in his basement)


Posted by: CoinYuppie，Reprinted with attribution 

WILD WILD WEST
FTX Agrees to Acquire Canadian Trading Platform Bitvo as It Eyes Regional Expansion

Oliver Knight
Fri, June 17, 2022


Cryptocurrency exchange FTX has entered an agreement to acquire Alberta-based trading platform Bitvo, in a deal that will be completed in the third quarter of 2022 subject to regulatory approval, according to a press release issued on Friday.

Bitvo, founded in 2018, is registered as a restricted dealer under the securities laws of all provinces and territories in Canada. It is also registered with FINTRAC, Canada's financial intelligence agency, as a money services business in the virtual asset service provider category.

“We are delighted to enter the Canadian marketplace and continue to expand FTX’s global reach," said FTX CEO Sam Bankman-Fried in a statement. "Our expansion into Canada is another step in proactively working with cryptocurrency regulators in different geographies across the globe.”

The Bitvo team is expected to be integrated with FTX's global workforce following the acquisition, with responsibilities across the Canadian market.

Bitvo CEO Pamela Draper added that "Canada has shown a growing interest in digital asset trading, and we’re thrilled to help provide entry into one of the leading regulated crypto asset trading platforms in the world to the Canadian cryptocurrency community."

Last June, rival exchange Binance pulled out of Ontario after several trading platforms failed to comply with the province's crypto regulations.

In October, Canada listed the Purpose Bitcoin ETF, which is billed as the world's first spot bitcoin ETF. It currently has $1 billion in assets under management.

Retail Traders Who Drove 

Meme Frenzy Bail Out in

Bear Market

Vildana Hajric and Peyton Fort

Fri, June 17, 2022

(Bloomberg) -- Stock traders who whipped up the meme craze that took Wall Street by storm last year are furiously rushing to the exits.

Roughly 50% of single-stock retail positions in the Nasdaq 100 and a quarter of those in the S&P 500 that had been accumulated since January 2019 have been sold, according to data from Goldman Sachs Group Inc. In another sign their exuberance has faded, call-option volumes have reversed about 70% of their increases from the start of 2019 to November 2021, when tech stocks and Bitcoin peaked.

“While historically retail investors have bought the dip, this time they haven’t,” wrote John Marshall, head of derivatives research at Goldman Sachs.

Wall Street had been obsessed with how at-home traders were behaving during the pandemic when it came to the market. The boredom-markets-hypothesis -- which postulated that many of those were stuck at home with little to do turned to stocks to fill their time and satisfy their boredom -- became just about settled science. Stocks only go up, the saying went at the time, with indexes notching impressive returns even as the pandemic raged.

Hordes of day traders flooded social-media forums like Reddit and Twitter and fed each other information and trading tips. Their collective efforts famously pushed up shares of GameStop Corp. and AMC Entertainment Holdings Inc., among others, dealing a blow to big-name short sellers who had bet against those stocks.

But the tides have turned and 2022 has offered only rough trading and much gut-wrenching volatility. The gumption among the retail crowd to buy the dip has come to a test, with the strategy not faring as well in a market that’s seen the S&P 500 lose more than 20% and the Nasdaq 100 drop 30% this year. In fact, a retail-investor behavior measure by TD Ameritrade shows they have been cutting exposure to equities all year.

“The way that they’re likely going to be trading going forward is likely selling dips as they try to protect any gains that they may have or reduce further losses,” said Eric Johnston, head of equity derivatives and cross asset at Cantor Fitzgerald. “We can no longer count on the individual investor to be a backstop for this market.”

All manner of investments have lost value in 2022. Among the retail crowd, tech and biotech have been heavily sold, according to Goldman. Meanwhile, a basket of retail-favored stocks tracked by the bank has lost more than 40% year to date, and another made up of companies most frequently mentioned on social-media forums is down roughly 50%. Crypto, another individual-investor favorite, has also been stuck in the gutter.

A key concern for economists, now that the Federal Reserve is working on cooling the economy and inflation, is how the consumer will bear it out. And while a debate rages over the central bank’s ability to engineer a softish landing or over-correct into a recession, even a mild one, consumers have already shown some signs of pulling back. Data this week showed retail sales in May unexpectedly declined for the first time in five months.

Charles Schwab surveyed over 1,000 of its retail clients in April and found that 57% of respondents have a bearish outlook on the U.S. stock market for the second quarter of 2022, an increase of 29% from the same time last year. The primary driver of the negative outlook is the higher cost of living, followed by geopolitical concerns, according to Schwab.

“Consumers are pulling back,” said Chris Gaffney, president of world markets at TIAA Bank. “We’re seeing most investors sit this out, which is probably smart, sitting out the volatility.”

Still, Goldman says retail investors are continuing to put money toward exchange-traded funds, especially and dividend-focused ones, which have seen more than $30 billion of inflows this year.

“There has been a regime shift from the old FAANG megatech names to more defensive, income plays,” said Jane Edmondson, CEO and founder of EQM Capital.

ONE OF THOSE MEME STONKS

AMC shareholders vote against 

CEO Adam Aron's $19 million 

pay package

Fri, June 17, 2022

2021 Milken Insitute Global Conference

(Reuters) - Shareholders of AMC Entertainment Holdings Inc voted against its proposed executive compensation including that of top boss Adam Aron at the company's annual shareholder meeting, the theater chain said on Friday.

The vote at the meeting on Thursday was advisory, which means the company is not obligated to make changes to the compensation plan, it said in a regulatory filing 

https://www.sec.gov/ix?doc=/Archives/edgar/data/1411579/000155837022010100/amc-20220616x8k.htm

In 2021, Aron collected a total of $18.9 million in remuneration, down by about 10% from a year earlier, according to a filing

 https://www.sec.gov/Archives/edgar/data/1411579/000110465922052849/tm223267-1_def14a.htm#tECPE

Aron's pay last year included about $11.4 million in stock awards and his base salary rose about 32% to $1.45 million.

AMC said in April that the CEO and the company's finance chief were given larger base salary hikes "in recognition of their extraordinary efforts to ensure the Company's survival" during the COVID-19 pandemic.

Proxy advisers Institutional Shareholder Services (ISS) and Glass Lewis recommended that shareholders vote against the compensation plan, according to a report by Bloomberg News.

ISS and Glass Lewis did not immediately respond to Reuters' requests for comment.

The company's shareholders also voted to elect all the board nominees, including Aron.

After becoming one of the biggest victims of the pandemic, AMC is seeing a revival in business, driven by a steady stream of new releases such as "Doctor Strange and the Multiversity of Madness" and "Top Gun: Maverick"

Wells Fargo economist likens crypto collapse to the dot-com bust


Mark Vitner, senior economist for Wells Fargo, sees similarities between today's cryptocurrency collapse and the dot-com bust of more than 20 years ago.


By Mark Calvey – Senior Reporter, San Francisco Business Times
Jun 17, 2022


The collapse in bitcoin and other cryptocurrencies is raising the specter of a replay of the dot-com bust of more than two decades ago. That was an era of widespread pain, which could be playing out again.

As crypto lenders, hedge funds and individual investors face falling prices and margin calls, the pain could be felt in other parts of the financial universe, including the broader stock and real estate markets.


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“I liken what we’re seeing in crypto to both the dot-com crash and to an economic term called Gresham’s Law that says bad money chases out the good,” Mark Vitner, senior economist at Wells Fargo (NYSE: WFC), told me in a wide-ranging interview Friday morning.

“If you borrowed money to invest in crypto, or you borrowed money because you thought you were a lot richer than you were because crypto had appreciated, then you may be in a position where you have to sell something good to pay for something that now is bad,” Vitner said. “All the way up, people borrow against their best assets, so they tend to take on more and more risk.”

Crypto enthusiasts like to consider bitcoin to be a countercyclical store of value, much like gold. But Vitner isn’t buying it.

“I’m afraid that when it comes to crypto, we’re probably gonna see some carryover into the real estate market,” Vitner said. “We’re probably seeing some carryover to the stock market.”

It’s been an ugly week for crypto. Bitcoin and other cryptocurrencies have plunged, triggering margin calls. Some crypto "coins" have become essentially worthless. Celsius Network LLC, a large crypto lending platform, told customers it was pausing withdrawals, swaps and transfers due to extreme market conditions. Coinbase, once based in San Francisco before embracing a no-HQ strategy, will lay off 18% of its workforce, or about 1,100 workers.

On Friday, crypto hedge fund Three Arrows Capital hired advisers to consider its options after suffering heavy losses, the Wall Street Journal reported. The same day, Hong Kong-based crypto lender Babel Finance said it was suspending redemptions for all of its products, citing “unusual liquidity pressures.”

All that doesn’t bode well for crypto’s outlook, but it does provide more fodder for bitcoin’s critics.

"Currency has three purposes: to facilitate transactions, a store of value and a speculative component,” Vitner said. “Really, the only thing that bitcoin fulfills out of those three is the speculative component.

“Gold is probably a better store of value. It’s boring, but that’s what a store of value is,” Vitner added.

“I don’t know how much of a threat it is to the economy, but the parallels between crypto and the dot-com bust are kind of eerie,” Vitner said, pointing to the millions of dollars that dot-com startups paid in 2000 for Super Bowl ads, a move several crypto companies made this year.

In the dot-com bust that began after the stock market peaked in March 2000, dozens of startups met their demise. After the bust, no one wanted to be called a dot-com.

“I think the term 'cryptocurrency' will be retired," Vitner said.

Today’s speculation has been fueled in part by low interest rates that forced many investors to take on greater risk to achieve satisfactory returns. Those low rates are now just a memory as today’s startups in crypto, fintech and other sectors reconsider their spending.

In the wake of the dot-com bust, Bay Area venture capitalist John Doerr said, “Money that is priced irrationally, will be spent irrationally.”

Longtime Bay Area economist Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at U.C. Berkeley’s Haas School of Business, doesn’t share Vitner’s concern that crypto's collapse will spill into the real estate market. But asked whether crypto is a replay of the dot-com era, Rosen said: “There’s echoes of it. Cryptocurrency has the same feel to me personally.

“I thought it was not a sustainable boom,” Rosen said. "Cryptocurrency, honestly, felt like a Ponzi scheme to me. There is no inherent value in it whatsoever."


Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley

SAN FRANCISCO BUSINESS TIMES

Federal Reserve Board: Recent Market Turmoil Shows ‘Structural Fragilities’ of Crypto

Amitoj Singh 

Fri, June 17, 2022

Drew Angerer

The Federal Reserve Board has released its twice-yearly monetary policy report, noting that "recent strains experienced in markets for stablecoins…and other digital assets have highlighted the structural fragilities in that rapidly growing sector."

• The report is a preview of Fed Chair Jerome Powell's testimony in Congress next week. Powell is expected to outline the Fed's plans to combat inflation. This week, Powell announced a 75-basis point rise in short-term interest rates, the largest increase in 28 years.

• The report, which is submitted to the President of the Senate and the Speaker of the House of Representatives, elaborated on how "generally, stablecoins that are not backed by safe and sufficiently liquid assets and are not subject to appropriate regulatory standards create risks to investors and potentially to the financial system, including susceptibility to potentially destabilizing runs."

• The TerraUSD stablecoin collapsed in dramatic fashion last month, functionally losing all of its value. The report pointed to the "concentrated nature" of the stablecoin sector in which Tether, USD Coin and Binance USD constituted more than 80 percent of the total market value, growing rapidly over the past year to more than $180 billion in March 2022.

• According to the report, "these vulnerabilities may be exacerbated by a lack of transparency regarding the riskiness and liquidity of assets backing stablecoins."

• The report added that the President’s Working Group on Financial Markets, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency have all made recommendations to address prudential risks posed by stablecoins.

The get-rich-quick days of crypto are over. Investors are losing their shirts, but industry players say this is healthy



Taylor Locke
Sat, June 18, 2022

It seemed like there was nowhere to hide in the crypto market this week.

Forced selling and liquidity troubles have “resulted in one of the worst quarterly price performances of the crypto space,” Lucas Outumuro, head of research at IntoTheBlock, wrote Friday in his newsletter.

“Overall, this week concludes a historic crash for crypto. We have witnessed record-level activity in multiple metrics as mayhem ensues throughout the market,” Outumuro wrote. “While it may still be too early to call the bottom, there are some evident similarities with previous bear markets.”

Bitcoin, the largest cryptocurrency by market value, fell below $20,000 on Saturday for the first time since December 2020. Ether, the second-largest cryptocurrency, dropped below $1,000, a level not seen since January 2021. The overall cryptocurrency market cap is below $1 trillion, from an all-time high north of $3 trillion.

As they anxiously watch on-chain movement, investors are wondering what’s ahead. Industry players are nearly certain that many projects will disappear, while adding that this reveals issues with centralization and leverage issues, but to some of them, there’s a silver lining.

“This is healthy,” Corey Miller, growth lead at cryptocurrency exchange dYdX, told Fortune.

Short-term adjustments

The domino effect within the cryptocurrency market will likely continue, at least in the short term, industry players predict. More pain is ahead for investors and projects exposed to excessive leverage or other operational issues. It seems to all trace back to Terra.

Though macroeconomic factors, including higher than expected inflation numbers in the U.S., set the stage for headwinds to come, the Terra ecosystem collapse—with failed algorithmic stablecoin TerraUSD (UST) and its original cryptocurrency Luna (LUNC) becoming nearly worthless—was an undeniable big bang in the space.

At its height, UST and LUNC were worth $60 billion, and after they collapsed to about zero in May, the impact on connected institutions became apparent this week. One of the cryptocurrency market’s biggest lending platforms, Celsius Network, paused its withdrawals on Sunday, sparking rumors of bankruptcy. Reports concerning the state of multibillion-dollar fund Three Arrows Capital followed soon after, fueling further fears of contagion and systemic risk. As days go on, more and more firms, companies, and platforms alike are coming forward with updates on their financial health or lack thereof.

From big players to everyday investors, the impact is being felt far and wide. Even major cryptocurrency-related companies, like Coinbase, Gemini, BlockFi and Crypto.com, recently announced layoffs and headcount reductions—several of them having just spent millions on Super Bowl ads as crypto’s market cap was near its peak.

“Things are really shaky right now and it’s going to take a while for things to stabilize. People are watching and waiting to see if something else will topple,” Michael Safai, managing partner at cryptocurrency trading firm Dexterity Capital, told Fortune. To be a “trusted ecosystem, investors have to feel confident that when they put money in, they’re able to get it out. This is definitely setting back a lot of that trust.”

Currently, we’re in a bit of a “hangover,” Jason Urban, co-head of Galaxy Digital Trading, told Fortune. In the near term, continued volatility is expected.

“I think for the next three to six weeks, people are going to be figuring out what exactly has happened, and who is well healed and who is not. That’s the first step,” Urban said. Subsequently, “there are going to be projects that don't make it, and there are going to be projects that become wildly successful,” he added.

What we are seeing now is “excessive risk being wiped out from the ecosystem,” Miller, growth lead at cryptocurrency exchange dYdX, told Fortune, which he says is a healthy development. “While it does reveal many interconnected links within crypto, these wipeouts support the idea that crypto as a whole remains resilient to existential risks.”

Looking ahead

Coming out of this crash, major players in crypto say changes are all but certain in the space. There might be a hesitancy towards certain projects, depending on their code and pitch, or with platforms offering extremely high yield by over-leveraging. Regulation may also soon follow, but many in the space remain bullish on future innovation.

Urban compared the current state of the crypto market to the bursting of the internet bubble in 2000. Looking ahead, he predicts that alongside the distress, innovation will come out of this time period. Many others echoed his remarks.

“In stocks and crypto, you will see companies that were sustained by cheap, easy money—but didn’t have valid business prospects—will disappear,” Mark Cuban, avid cryptocurrency investor, told Fortune. “Like [Warren] Buffett says, When the tide goes out, you get to see who is swimming naked.”

While this will be a “very bad” period for “poorly built or not very useful projects,” things will be “much less bad for valuable ones,” Sam Bankman-Fried, chief executive officer of cryptocurrency exchange FTX, also told Fortune. “I don't think we'll see sectors die out but we might see some rotate to more sophisticated versions.”

In the long term, Safai sees less excessive yield and leverage.

“There’s going to be a lot of shaking up to be done,” Safai said. “[T]his era of being able to get exceptional yield for nothing is over. This is when a lot of leverage is going to get pulled out of the system, and this will ultimately make the crypto ecosystem safer.”

This downturn has revealed the crypto-related projects and funds that were “utilizing more risk than what was prudent,” Miller said. “Similar to other downturns, many players become forced sellers and are subsequently washed out.”

In response to the carnage this time around, government regulators have already signaled interest in furthering the development of a regulatory framework for the cryptocurrency market. Those within the space have mixed feelings about government intervention, but it might be happening whether they like it or not.

“We believe that regulation is a positive development in our industry as it will force players to disclose more details on their activities so that clients can better assess the potential risks associated and how they vary across different companies,” Adam Reeds, co-founder and chief executive officer at cryptocurrency lending platform Ledn, told Fortune.

While recent events, like the collapse of UST and LUNC, has “posed a threat to crypto market sentiment and is a catalyst for regulation, it will ultimately not stop the growth of innovation in Web3,” Isla Perfito, chief executive officer of Sator, a blockchain-based entertainment platform, told Fortune.

Lessons learned

Though some industry veterans see similarities between this downturn and previous “crypto winters,” some lessons specific to this crash will carry extra weight going forward.

The “biggest thing” to come out of this downturn will be a “focus on fundamentals,” says Tom Dunleavy, Messari senior research analyst.

“In the past, … [t]he new and most interesting projects got the capital, and grew to unbelievably large sizes for what they were actually accomplishing (or could really accomplish),” Dunleavy told Fortune. “The focus going forward will be on strong protocols, strong teams, and strong use cases.”

He also predicts that this downturn will “essentially end” the “wars” between Ethereum (ETH) competitors. “There is going to be BTC [or Bitcoin] and ETH, and then a long tail of projects fighting for the remaining 20% to 30% of crypto market cap."

Major takeaways from this crash will also shape the future of the space, industry players say.

“Everyone is having to take a good hard look at their risk management right now, but exchanges seem to be pretty inoculated from this madness. With less capital at everyone’s fingertips, the question for traders will be how to more intelligently deploy capital and optimize activity in a world where leverage is limited,” Safai said.

This will be important because “a handful of trading firms make up a significant amount of market activity, and the market doesn’t want to be without them,” he said. “Shops that navigated other lengthy crypto downturns will lean on that experience and probably come out far stronger, to the benefit of the industry.”

This story was originally featured on Fortune.com

Crypto’s Excruciating Week Has Traders

Bracing for Next Crisis

Michael P. Regan

Sat, June 18, 2022

Crypto’s Excruciating Week Has Traders Bracing for Next Crisis

(Bloomberg) -- It was one of the most dramatic weeks in the short history of the cryptocurrency market, bookended by the type of announcements investors fear the most from a counterparty: We’re sorry, but we just can’t return your money right now.

In between, a nascent technocratic industry with grand ambitions to reinvent the financial system was rocked repeatedly by echoes of past crises in the old system. It was a week of margin calls, forced selling and important collateral being exposed as way too illiquid in a time of crisis. There were rumblings of hedge-fund blowups, tales of opportunistic predatory trading, job cuts and loud denials of problems from key players proven wrong almost immediately.

Amid it all, the myth was shattered once and for all that this new crypto financial system was somehow immune to -- or even able to benefit from -- the economic fundamentals currently punishing the old system.

It all started late Sunday, when a sort of crypto shadow bank called Celsius Network suspended withdrawals from depositors who had been enticed by sky-high interest rates that, in retrospect, were likely too good to be true. By the end of the week, on the other side of the world in Hong Kong, the digital-asset lender Babel Finance also froze withdrawals.

We’re working on it, both firms told customers, and no doubt they are. Yet speculation is growing that Celsius Network, at least, is drowning in what research firm Kaiko called a “Lehman-esque” position.

Like Lehman Brothers did almost 14 years ago, Celsius’s woes showed how interconnected big players in this financial system are and how fast contagion can spread, making this week’s drama the sequel to last week’s and the prequel to next week’s.

Many analysts have pointed to problems that Celsius is having with an Ethereum-linked token called staked ETH, or stETH -- a coin designed to be a tradable proxy for Ether that’s widely used in decentralized finance. While every stETH is meant to be redeemable for one Ether after long-awaited upgrades of the Ethereum blockchain take effect, recent market turmoil has caused its market value to fall below that level.

Terra Connection

Research firm Nansen has also identified Celsius as one of the parties involved when the UST stablecoin lost its peg to the dollar in May. The episode with that token, which was driven largely by algorithms, crypto animal spirits and untenable yields of 19.5% for depositors in the Anchor Protocol, triggered the loss of tens of billions dollars in the spectacular implosion of the Terra blockchain.

Nansen’s analysis confirmed that Terra’s Anchor program had been an important source of yield for Celsius, according to commentary from crypto exchange Coinbase. “In our view, this likely begged the question of how Celsius could fulfill its obligations without that 19.5% yield,” wrote the institutional team at Coinbase. That firm, by the way, said this week it will lay off 18% of its previously fast-growing workforce, joining other pink-slip-issuing crypto startups such as Gemini and BlockFi that are struggling amid a relentless plunge in asset prices that’s been dubbed “crypto winter.”

The drama ramped up on Wednesday with an alarming tweet that seemed to confirm speculation that had been swirling around one of the most influential hedge funds in crypto, Three Arrows Capital. “We are in the process of communicating with relevant parties and fully committed to working this out,” one of the firm’s co-founders wrote, without revealing any details about what exactly the “this” was that it was working out.

By the end of the week, the multi-billion-dollar fund’s founders had explained to the Wall Street Journal that they were exploring options that include a rescue by another firm and an agreement with creditors that would buy them time to work out a plan. Three Arrows, too, was a casualty of both the stETH woes and Terra’s collapse. The fund had bought about $200 million in the Luna currency used to back up the value of Terra’s UST stablecoin, according to the Journal. Luna, which sold for more than $119 in April, is now worth about $0.000059.

Just as Bear Stearns’s hedge funds were among the first to reveal problems from the subprime mortgage crisis, Three Arrows is likely not alone. The “cockroach theory” springs to mind: If you see one of those nasty bugs scurrying across the floor, chances are there are plenty more hiding behind the fridge or under the sink.

Crypto Shark Tank

In fact, the hot trade in crypto now is no longer pumping coins “to the moon” with tweets full of rocket-ship emojis, but rather trying to find where those roaches are hiding and make a meal out of them. Some crafty traders have dispatched bots to prowl blockchains in search of highly leveraged positions in danger of forced liquidation because the value of their collateral is no longer enough to back up their loans. If successful, they get a 10% to 15% cut of the collateral sale -- incentives paid out by automated protocols that are meant to protect them from insolvency.

As the dust settled at the end of the week, the damage was startling. Bitcoin has notched 12 straight days of losses, its longest sustained slump, and it breached $20,000 early Saturday for the first time since 2020. Flailing against a backdrop of monetary tightening, the world’s largest cryptocurrency is now down more than 70% from its highs in November when it was approaching $70,000. Ether dipped below $1,000, having sold for as much as $4,866 seven months ago. What was once a more than $3 trillion industry is now valued at less than $1 trillion.

And despite the similarity of past crises in traditional finance, there is one big difference as the weekend approaches: Players in the old-fashioned markets at least get to turn their machines off on Saturday and Sunday to get some sleep and lick their wounds. As a three-day holiday weekend approaches in the US, with forecasts for sunny skies in New York, those with heavy exposure to digital assets will remain glued to their screens, where crypto winter’s deadly blizzard shows little sign of letting up.

Bitcoin Plunges Below $20K for First Time Since December 2020; Ether Drops Below $1K


OGNYAN CHOBANOV

Greg Ahlstrand, James Rubin
Sat, June 18, 2022

Bitcoin (BTC) sank below $20,000 for the first time since December 2020, losing 9.5% in the past 24 hours. At time of publication, the largest cryptocurrency by market cap was changing hands around $18,984.1 after trading at a low of $18,739.50.

Ether (ETH), the second largest crypto, also continued its decline, falling 9.78% to about $992 at time of publication.

The crypto panic – which began a few weeks ago with the Terra ecosystem collapse and then spread to the Celsius platform – has moved on to hedge fund Three Arrow Capital, which reportedly had its collateral liquidated by crypto lender BlockFi.

Checking traditional markets, U.S. stocks saw more massive selling on Thursday, with the Nasdaq tumbling 4.1% and the S&P 500 3.25% before a slight recovery on Friday. For the week, the Nasdaq and S&P are each lower by about 6%.

Amitoj Singh contributed to this report.

Crypto Traders Turn Against Each Other in a Collapsing Market




Olga Kharif
Fri, June 17, 2022, 5:

With crypto prices tumbling precipitously, traders have begun increasingly turning against one another to eke out ever-elusive profits.

Many shark traders scour blockchains -- digital ledgers for recording transactions -- seeking information on other traders, particularly those with highly leveraged positions, an anonymous user known as Omakase, a contributor to the Sushi decentralized exchange, said in an interview.

The sharks then attack the positions by trying to push them into liquidation, and earning liquidation bonuses that are common in decentralized finance (DeFi), where people trade, lend and borrow from each other without intermediaries like banks.

Related strategies may have contributed to the collapse of the TerraUSD stablecoin, with shark traders making money off price arbitrage between the Curve decentralized exchange and centralized exchanges, according to Nansen, a blockchain analytics firm.

Recent troubles at crypto lender Celsius Network were exacerbated by arbitragers as well. The price of stETh token that Celsius has a large position in started trading at a large discount from Ether, to which it’s tied.

“As stETH goes down, arbitragers buy stETH and short ETH against it, sending ETH lower, which again lowers collateral values across DeFi,” effectively worsening Celsius’s position, according to a recent Arca note.

As Omakase put it, “In a downtrend environment, where yields are harder to access, what we are going to see is some actors utilize some more aggressive strategies, and that may not be necessarily good for the community.”

“The environment has become more player vs player,” Omakase added.

With crypto prices under pressure, taking on leverage has presented an even greater peril. Last year, Sushi launched a margin-trading and lending platform. Most crypto exchanges offer margin trading, and in the past it has been as high as 100X, meaning that people were able to borrow 100 times what they put down as collateral.

Most DeFi apps require traders to overcollateralize, however -- effectively taking out less in loans than they put in.

Driving Down the Price

A trader may find out that others could get liquidated when a coin’s price drops to, say, $100. The trader could then build up a sufficient position in the coin, then sell in order to pull the price below $100, while also collecting the reward for liquidating the trader that most DeFi apps offer.

“Most protocols offer a 10-15% liquidation fee,” Omakase said. “Triggering enough liquidations would cause a liquidation cascade where a motivated actor could simply hold a short position in order to profit for the subsequent secondary decrease.”

Other traders are simply profiting off liquidations they don’t trigger. Nathan Worsley runs a slew of bots -- software programs -- that search for traders who are about to get liquidated and gets paid a commission for liquidating them.

“Recently the amount of liquidations has been huge,” Worsley said in emails. “However, liquidations is not a continuous strategy, you sometimes go for a week or more without any significant liquidations. However, when liquidations happen there are usually a lot at once. You basically have to work a long time while making $0 profit, in order to be ready for the big day or two when you might be able to make a million dollars at once.”

His bots continuously scour blockchains, keeping a list of all the borrowers using a particular app and scrutinizing the health of their accounts. Once positions are ready for liquidation, “it’s usually a battle to be the quickest and perform the liquidation,” Worsley explained.

“I would push back on classifying this as an ‘attack,’” he added. “The reason is because without liquidations, you can’t have a lending market. So even though no one enjoys being liquidated, it’s essential that people do get liquidated in order to make the market and protect the protocol from insolvency.”

Liquidations can be triggered after traders borrow from apps like Aave or Compound, and put up collateral -- say, in Ether -- that’s typically greater than what they borrow, perhaps 120% of the borrowed funds. If Ether’s price drops, that collateral may now be worth only 110% of what the trader borrowed.

‘Protect the Protocol’

“My job as the liquidator is to protect the protocol by closing your position,” Worsley said. “The protocol gives me a reward for being a liquidator to encourage this activity, because blockchains cannot move by themselves. You have borrowed $1,000 of Bitcoin, so I repay the $1,000 of Bitcoin you owe the protocol. In return, the protocol gives me $1000 of your Ethereum collateral, plus a $100 ‘liquidation bonus’ from your excess collateral. I have made a profit, you have been liquidated and your position is closed, and the protocol itself has been protected from bad debt.”

With liquidation targets becoming more and more tempting in a tumultuous market, Omakase offers this advice: “Generally everyone should stay safe, everyone should avoid the use of leverage.”

Three Arrows Capital Confirms Heavy Losses From LUNA's Collapse, Exploring Potential Options: Report

Shaurya Malwa 

Fri, June 17, 2022

Beleaguered cryptocurrency fund Three Arrows Capital (3AC) confirmed Friday it had suffered heavy losses in the recent market downturn and said it had hired legal and financial advisors to figure a way out, according to a WSJ report.

• “We are committed to working things out and finding an equitable solution for all our constituents,” 3AC co-founder Kyle Davies told the WSJ. The fund had over $3 billion worth of cryptocurrencies under management as of April.

• 3AC is exploring options including asset sales and a rescue by another firm and hopes to reach a settlement with creditors, Davies said. 3AC owes at least $6 million to crypto exchange BitMEX, as per a separate report by The Block today.

• Davies said 3AC invested over $200 million in LUNA tokens as part of a $1 billion raise by the Luna Foundation Guard in February, an amount that is now essentially worthless since the Terra ecosystem imploded in mid-May. “The Terra-Luna situation caught us very much off guard,” Davies told the WSJ.

• LUNA lost nearly all of its value over the course of a week, while ecosystem algorithmic stablecoin terraUSD (UST) fell to a few pennies after losing its intended peg with the U.S. dollar.

• 3AC was additionally known as one of the largest holders of Grayscale Bitcoin Trust (GBTC), an institutional bitcoin product, as well as staked ether (stETH) tokens, both of which have seen steep declines recently (Grayscale and CoinDesk are independent subsidiaries of the Digital Currency Group).

• Davies added that 3AC was working on quantifying its losses and valuing its illiquid assets, which include many venture-capital investments in crypto startups.

• Meanwhile, Nichol Yeo, a partner of law firm Solitaire LLP, which is advising 3AC, told the WSJ that it was keeping Singapore’s financial regulator, the Monetary Authority of Singapore, apprised of 3AC's recent developments.

Babel Finance suspends withdrawals as crypto markets slump


Fri, June 17, 2022

FILE PHOTO: Illustration shows representation of cryptocurrency bitcoin

(Reuters) - Hong Kong-based Babel Finance temporarily suspended the withdrawals and redemption of crypto assets on Friday, as the crypto lender scrambles to pay its clients after the recent slump in the digital currency market.

Cryptocurrency valuations have plunged in recent weeks as investors dump risky assets in a rising rate environment, with bitcoin, which reached a record high of $69,000 in November, having lost more than half its value this year.

"Recently, the crypto market has seen major fluctuations, and some institutions in the industry have experienced conductive risk events. Due to the current situation, Babel Finance is facing unusual liquidity pressures," the company said.

Crypto lenders gather crypto deposits from retail customers and re-invest them, proclaiming double-digit returns and attracting tens of billions of dollars in assets. However, the recent meltdown has lenders unable to redeem their clients' assets.


Babel, which has 500 clients and limits itself to bitcoin, ethereum and stablecoins, raised $80 million in a funding round last month, valuing it at $2 billion. It had ended last year with $3 billion of loan balances on its balance sheet.

Earlier this week, U.S.-based retail crypto lending platform Celsius Network froze withdrawals and transfers between accounts "to stabilize liquidity" as the collapse of cryptocurrency TerraUSD in May triggered a rise in redemptions.

(Reporting by Sameer Manekar in Bengaluru; Editing by Amy Caren Daniel)

Bitcoin’s nosedive through the $20,000 mark is a Minsky Moment for crypto: ‘Psychologically for a lot of people, this is galling’

Mark DeCambre - 
Fri, June 17, 2022


Is bitcoin facing a breaking point? That’s what some investors, acolytes and otherwise, might be contemplating, as the cryptocurrency’s descent accelerates over the weekend. The world’s No. 1 digital asset was last trading at $18,654, down more than 70% from its peak of around $65,000, with the broader crypto market feeling to some as if it were in free fall.

“Psychologically for a lot of people this is galling,” said Charles Hayter, chief executive officer of CryptoCompare, a company that provides data and analytics about the crypto market.

Hayter, speaking to MarketWatch in a weekend interview, allowed that the risks inherent in bitcoin are part of its appeal.

Yves Lamoureux, the bitcoin-bullish president of Montreal-based macroeconomic research firm Lamoureux & Co., said that debt swirling around in the crypto market has amplified recent swings lower, with a number of highly indebted companies facing margin calls and this arcane business’s version of Wall Street bank runs. “If my read is correct, this is massive liquidation of huge leverage in the system,” said Lamoureux.

“It’s too easy as usual because bitcoin has this way of over [extending],” he said.

Indeed, Crypto lender Celsius Network LLC has reportedly hired restructuring attorneys from law firm Akin Gump Strauss Hauer & Feld LLP to advise it after the company told users that it was pausing all withdrawals, swaps and transfers among accounts, “due to extreme market conditions.”

Don’t miss: Celsius abruptly cancels AMA session as company navigates ‘very difficult challenges’

Also see: Crypto suffering a ‘Long Term Capital Management moment’: Michael Novogratz

On top of that, a major player in decentralized finance markets, or DeFi, a corner of the crypto world where traders often seek to earn money on leveraged crypto, has reportedly faced its own challenges.

“We are seeing rapid Minsky cycles in this space,” Hayter said.

Economist Hyman Minsky, who died in 1996, espoused a view that a period of distortions in the financial system eventually ends very badly.

Signs of trouble in crypto markets emerged in May with the collapse of the Terra, an algorithmic stablecoin blockchain pegged to fiat currencies like the dollar, which are intended not to hold their value against the peg.

See: This 24-year-old quit his job at hedge-fund powerhouse Citadel to build anew on the Terra blockchain — which collapsed two months later

“Bitcoin has already broken down [and is] now seeing significant downside follow-through,” Katie Stockton, a market analyst at Fairlead Strategies, told MarketWatch ahead of the release of a Saturday report to clients on bitcoin’s technical levels.

She said bitcoin’s collapse isn’t 100% confirmed but called sentiment badly deteriorated. If negative momentum continues, she said, she sees the next support at $13,900, based on her analysis.

Hayter said the current situation should be seen as par for the course for bitcoin and its ilk, “with perhaps,” he speculated, “the next iteration allowing regulation to strengthen the natural weak points.”

As is typical of crypto diehards, optimism reigns supreme: “I think bitcoin is fine,” said Lamoureux. “It’s moving from weak hands to strong hands.”

While bitcoin is down 59% in 2022, the equity benchmark S&P 500 is off almost 23%. The blue-chip Dow is down 17.8%. Gold has edged upward by 0.61% and the U.S. dollar index by more than 9%.

Bitcoin Tumbles Below $19,000 

for the First Time Since 2020

The most popular cryptocurrency has been in free fall

for several weeks now.

• LUC OLINGA 
Fri, June 18, 2022

It's a real debacle. 

Bitcoin fell below $20,000 and $19,000 for the first time since 2020, marking a week in which panic seems to be dominating the cryptocurrency market. 

The price of Bitcoin was at $18,766.13 at last check, according to data firm CoinGecko. The most popular digital currency was down more than 9% in the last 24 hours and 35.7% in the last seven days.

The price of Bitcoin was last seen at these levels around December 12, 2020. But since then it had been a meteoric rise until a crash began starting this year.

Ether, the second cryptocurrency by market value, also fell below the symbolic threshold of $1,000. The native token of the Ethereum platform was worth $970.50, down 10.1% in the past 24 hours and down 41.6% in the past seven days.

Bitcoin has lost 72.7% of its value since hitting an all-time high of $69,044.77 on Nov. 10. Ether for its part lost almost 80% of its value compared to its record of $4,878.26 crossed the same day.

So it's no surprise that the crypto market's valuation has lost nearly $2.3 trillion to $866 billion since hitting a high of $3 trillion in November.

The reasons for the crash are the same: fears of recession are pushing investors to liquidate risky assets. Cryptocurrencies and tech groups are considered as such. 

'Terrible' News Cycle for Crypto

The crypto market is also shaken by various scandals.

The first is the sudden collapse of sister tokens UST and Luna, despite their founders promising that their technology was solid and viable. 

The second scandal is the decision, on June 12, by crypto lender Celsius Network to freeze withdrawals and other transactions from its platform. Rumors have since been circulating about a potential insolvency from Celsius, which has still not dispelled them.

Then, on June 17, crypto financial services company Babel Finance said it was temporarily suspending withdrawals and redemptions in the latest blow to the cryptocurrency sector.

"Due to the current situation, Babel Finance is facing unusual liquidity pressures," the firm said in a statement. "We are in close communication with all related parties on the actions we are taking in order to best protect our customers."

During this period, the statement continued, "redemptions and withdrawals from Babel Finance products will be temporarily suspended, and resumption of normal service be notified separately."

Babel Finance describes itself as "one of the largest service providers to institutions in the crypto financial markets."

"The news flow has been terrible for crypto," said Edward Moya, senior market analyst for the Americas with Oanda."The Texas Securities Board is investigating the Celsius network‘s decision to suspend withdrawals and everyone is expecting restrictive guidelines to quickly make life difficult for crypto-lending firms."

Moya said that Bitcoin declined "as risk appetite left Wall Street as investors became worried of a much quicker deterioration for the US economy."

"Surging recession fears are crippling appetite for risky assets and that has crypto traders remaining cautious about buying bitcoin at these lows," he said.

Crypto Suffers Another Blow: Babel Finance Freezes Withdrawals

The crypto firm suspends withdrawals and redemptions in latest shock to the crypto sector, leaving investors to ask 'who's next?'

ROB LENIHAN
JUN 17, 2022 

Crypto financial services company Babel Finance said it was temporarily suspending withdrawals and redemptions in the latest blow to the cryptocurrency sector.

The Hong Kong-based company said in a June 17 statement posted on its website that "recently, the crypto market has seen major fluctuations, and some institutions in the industry have experienced conductive risk events."

"Due to the current situation, Babel Finance is facing unusual liquidity pressures," the statement read. "We are in close communication with all related parties on the actions we are taking in order to best protect our customers."

During this period, the statement continued, "redemptions and withdrawals from Babel Finance products will be temporarily suspended, and resumption of normal service be notified separately."

The company's website describes its vision as "building open financial infrastructure for the future."

On May 25, Babel Finance closed an $80 million Series B fundraising round at $2 billion valuation.

Babel Finance describes itself as "one of the largest service providers to institutions in the crypto financial markets."

The company said it limits its business to Bitcoin, Ether -- the two largest cryptocurrencies by market value -- and stablecoins, and serves a select clientele of about 500 customers.

The news follows Monday's announcement from Binance, the world's largest cryptocurrency exchange by volume, that it was temporarily pausing Bitcoin withdrawals

Meanwhile, crypto lender Celsius Network announced that it would suspend indefinitely various transactions, including withdrawals of funds

Another Crypto Winter?

And Coinbase Global (COIN) - Get Coinbase Global Inc Report shares have been sliding after analysts at JPMorgan slashed their price target on the digital currency trading platform amid the trillion meltdown in global cryptocurrency markets.

The platform will cut around 18% of its workforce, a level that would eliminate around 1,100 jobs and generate '"substantial" reorganization charges.

"We appear to be entering a recession," which "could lead to another +crypto winter+, and could last for an extended period," Coinbase said in a blog post. "While we tried our best to get this just right, in this case it is now clear to me that we over-hired."

JPMorgan analyst Kenneth Worthington lowered his rating on Coinbase to neutral from overweight, while cutting his price target by more than $100 to $68 per share.

And last month, the crypto market was rocked by the collapse of the stablecoin UST or TerraUSD, and the Luna token.

Bitcoin has lost 30.4% of its value in the last week alone, according to CoinGecko, and was recently $20,960.76.

"The news flow has been terrible for crypto," said Edward Moya, senior market analyst for the Americas with Oanda."The Texas Securities Board is investigating the Celsius network‘s decision to suspend withdrawals and everyone is expecting restrictive guidelines to quickly make life difficult for crypto-lending firms."

Moya said that Bitcoin declined "as risk appetite left Wall Street as investors became worried of a much quicker deterioration for the US economy."

"Surging recession fears are crippling appetite for risky assets and that has crypto traders remaining cautious about buying bitcoin at these lows," he said

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