Distributed Ledger: Bitcoin records 7 consecutive weeks of losses. Could it turn around?

Crypto in a snap

Bitcoin
BTCUSD,
+2.83%
went up 4% over the past seven days, trading at around $30,183 on Thursday, according to CoinDesk data. Ether
ETHUSD,
+1.94%
lost 0.6% over the seven-day stretch to around $2,010. Meme token Dogecoin
DOGEUSD,
+0.60%
gained 7.6% while another dog-themed token, Shiba Inu
SHIBUSD,
-0.76,
traded up 6.4% from seven days ago.

Crypto Metrics

Biggest Gainers

Price

%7-day return

ApeCoin

$7.74

37.5%

Decentraland

$1.04

32.3%

eCash

$0.00006

30.4%

KuCoin Token

$14.5

28.7%

Chain

$0.09

27.5%

Source: CoinGecko as of May 12

Biggest decliners

Price

%7-day return

Luna

$0.0001

-100%

TerraUSD

$0.08

-90.1%

Osmosis

$1.5

-34.4%

Waves

$5.97

-30.8%

Convex Finance

$10.15

-26.9%

Source: CoinGecko as of May 19

Seven weeks in red

Investors are watching bitcoin’s close for this week, after the cryptocurrency posted seven consecutive weeks in losses, the first time in its 13 years of history.

A close above $32,000 “will technically be a bullish signal and could be
a sign of reversal,” according to a Monday note by Arcane research.

I’ve written more about what metrics are being watched here.

Less leverage

Compared with previous drawdowns, the forced liquidations of overleveraged bitcoin futures positions have been light, indicating a lower amount of leverage in the market, analysts at bitcoin company NYDIG wrote in a Thursday note.

“These low bitcoin futures liquidations are consistent with data we see elsewhere; leverage in bitcoin markets, often a culprit in big market moves, has been fairly benign,” the analysts wrote.

Aftermath of Terra’s collapse

After USDTerra and its sister coin Luna collapsed last week, several crypto companies and funds have disclosed information about their previous investments in the ecosystem and relevant losses.

Delphi Ventures: Venture capital firm Delphi Ventures said its Master Fund bought “a small amount of Luna” in the first quarter of 2021, which was 0.5% of the fund’s net asset value at the time, according to a Wednesday blog post. The fund has increased its exposure since then. It invested $10 million in a $1 billion Luna sale by Luna Foundation Guard in February, among other commitments, according to the post.  

The fund currently sits on a large unrealized loss, the firm said in the post. At Luna’s peak price of $119.5 in April, the coin and other Terra assets made up a total of 13% of the net asset value across Delphi Ventures, according to the post. Companies or protocols related to the Terra ecosystem made up less than 5% of Delphi’s total number of deals, the firm said.

Binance: Binance previously bought 15 million Luna for $3 million, according to Changpeng “CZ” Zhao, chief executive at the crypto exchange. Such a holding now is worth about $2,400, based on Luna’s recent price at $0.00016, according to CoinDesk data. The company has never moved or sold those tokens, Zhao wrote in a tweet Monday.

Galaxy Digital: Once a backer of Luna, billionaire investor Michael Novogratz in January got a wolf-themed tattoo to show his support for the cryptocurrency.

As Luna collapsed, the ink “will be a constant reminder that venture investing requires humility,” Novogratz wrote in an open letter published Wednesday. 

The principal investments team of Galaxy Digital, where Novogratz serves as a chief executive, invested in Luna in the fourth quarter of 2020 using balance sheet capital, Novogratz wrote in the letter. The firm’s treasury doesn’t use algorithmic stablecoin, he added. 

The billionaire said the collapse of UST and Luna serves as a reminder that in investing, it’s important to “keep a diversified portfolio, take profits along the way, have a risk management framework, and understand that all investments happen in a macro framework.”

“Galaxy did all of these with regards to our investment in LUNA,” according to Novogratz. 

The firm expects a $300 million loss in net comprehensive income this quarter as of May 11, bringing the partners’ capital to $2.2 billion, down 12% from March 31, according to a preliminary update released on May 13.

Crypto companies, funds

Shares of Coinbase Global Inc.
COIN,
+6.96%
gained 7.9% to $67.89 on Thursday, and they were up 16.3% over the past five trading sessions. Michael Saylor’s MicroStrategy Inc.
MSTR,
+6.75%
rallied 9.7% Thursday to $215.88, and it was up 26% over the past five days.

Mining company Riot Blockchain Inc.
RIOT,
+2.89%
shares were up 4.5% to $7.23, leaving it down 1.1% over the past five days. Shares of Marathon Digital Holdings Inc.
MARA,
+1.87%
gained 4.3% to $10.60, with a 4.6% gain over the past five days. Another miner, Ebang International Holdings Inc.
EBON,
+1.72%,
gained 2.6% to $0.75, with a 8.7% gain over the past five days.

Overstock.com Inc.
OSTK,
+1.76%’s
shares were up 4.9% to $28.70. The shares have lost 6.7% over the five-session period.

Shares of Block Inc.
SQ,
+6.26%,
formerly known as Square, rose 9% to $89.47, with a 17.9% gain for the week. Tesla Inc.
TSLA,
-0.05%
shares gained 1.3% to $717.56, and were down 1.5% over the past five sessions.

PayPal Holdings Inc.
PYPL,
+5.31%
gained 6.2% to $81.96, and it was up 10.3% over the five-session stretch. Nvidia Corp.
NVDA,
+1.10%
shares rose 2.8% to $173.44, looking at a 7.3% gain over the past five trading days.

Advanced Micro Devices Inc.
AMD,
+0.41%
shares were up 1.8% to $98.03 on Thursday, while it was up 12.7% from five trading days ago.

Among crypto funds, ProShares Bitcoin Strategy ETF
BITO,
+2.65%
went up 3.4% to $18.75 Thursday, while Valkyrie Bitcoin Strategy ETF
BTF,
+2.57%
was up 3.6% at $11.69. VanEck Bitcoin Strategy ETF
XBTF,
+2.72%
gained 3.1% to $29.40.

Grayscale Bitcoin Trust
GBTC,
+4.91%
traded up 6.2% to $19.70.

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