Week in Review: Bitcoin posts its worst quarter since 2011, while $4bn in miner loans face default risk

Bitcoin posted its worst quarter since 2011, down 56%, Voyager Digital sent a default notice to Three Arrows Capital (3AC) due to loan nonpayment, and market turmoil put $4 billion in miner loans at risk of default, among other events of the week.

Bitcoin’s second quarter of 2022 proved the worst in 11 years

The price drop of the first cryptocurrency over April86June by 56.2% was the steepest since Q3 2011, when losses amounted to 67%. In the period, Bitcoin fell from $45,000 to $19,884. In bear markets of 2014 and 2018, quarterly declines did not exceed 39.7% and 49.7%, respectively.

The investor Michael Burry admitted that the current market situation is the midpoint of Bitcoin’s bear cycle.

«Adjusted for inflation, in the first half of the year the S&P 500 fell 25–26%, Nasdaq — 34–35%, Bitcoin — 64–65%. That was a multipoint compression. Further — earnings declines followed. So perhaps, halfway there», — wrote Burry.

At the time of writing, digital gold was trading near $19,000. Over the past week, the asset’s price had fallen by more than 11%.

All top-10 cryptocurrencies by market cap were in the red. The worst performers were Solana (-23.3%) and Ethereum (-15.2%).

According to CoinCodex, over the week among mid-cap digital assets the best performer was the algorithmic stablecoin TerraClassicUSDT. The price of USTC rose 407% amid increased volumes of trading.

The token of the WOO Network project fell the most. WOO price declined by nearly 33%.

The aggregate market capitalisation stood at $920 billion. Bitcoin’s dominance index slipped to 40.5%.

Voyager Digital sent a default notice to 3AC, and a British Virgin Islands court ordered the hedge fund liquidated

Crypto broker Voyager Digital sent a default notice to hedge fund Three Arrows Capital (3AC) due to nonpayment of a loan. The broker extended a loan to 3AC of 15,250 BTC (more than $320 million) and 350 million USDC. On June 24 the company asked to repay part of the debt amounting to $25 million USDC, and then demanded repayment of the entire loan in BTC and stablecoins by June 27.

The British Virgin Islands court ordered the hedge fund to be liquidated. Later it emerged that among those urging this step were platforms Blockchain.com and Deribit.

At the same time the Monetary Authority of Singapore censured the fund’s actions and issued a reprimand for providing false information and exceeding the permitted threshold of assets under management.

3AC, in turn, filed for bankruptcy in a New York court. Chapter 15 of the U.S. Bankruptcy Code could shield the fund from asset seizure in the United States during the liquidation.

Bitcoin drop puts $4bn in miner loans at risk of default

Bloomberg reported that some mining companies are facing difficulties servicing loans secured by Bitcoin mining equipment. The publication estimates that $4 billion in loans are at risk of default.

JPMorgan analysts believe that liquidity-strapped mining companies in the third quarter may continue to press Bitcoin lower if mining profitability does not improve. Publicly traded miners account for about 20% of total hashrate today.

This week, hosting provider Dynamics Mining terminated its agreement with Bit mining equipment and services provider Compass Mining due to unpaid bills. The latter announced the resignation of CEO Witt Gibbs and CFO Jodi Fisher.

MicroStrategy and El Salvador bought more Bitcoin

The analytics software provider MicroStrategy bought an additional 480 BTC at an average price of $20,817. The company owns 129,699 BTC, bought for $3.98 billion at an average price of $30,664.

The government of El Salvador also bought an additional 80 BTC for a total of $1.52 million.

Harmony offered a bounty for returning $100 million stolen; analysts suspect Lazarus behind the attack

Earlier in the week the Harmony protocol team offered a bounty of $1 million for the return of the $100 million stolen from the Horizon cross-chain bridge or information leading to the attackers. After community criticism it was raised to $10 million.

Elliptic researchers said that the Horizon attack may have been carried out by the North Korea-linked Lazarus group, based on a similar attack vector to the Ronin sidechain. Analysts note that the hackers have already sent 41% of the stolen crypto assets to Tornado Cash.

Reuters noted that the market downturn threatens funding for North Korea’s weapons program, as the assets stolen by hackers could have fallen by hundreds of millions of dollars.

What to discuss with friends?

• The FBI has named OneCoin founder Ruja Ignatova among the world’s most-wanted criminals.
• Meta will close its Novi digital wallet.
• Bitcoin’s decline has stripped 82,600 investors of millionaire status (75%).
• Popular TikTok influencer Habi Leim became an ambassador for Binance.

OpenSea reports user data breach

OpenSea, the leading NFT marketplace announced a data breach of user data by a Customer.io employee — the email-addresses of customers were handed to a third party. OpenSea warned of possible phishing attempts as a result.

FTX chief warns of “hidden insolvency” at some crypto exchanges

FTX CEO Sam Bankman-Fried believes some third-tier Bitcoin exchanges are near bankruptcy. The billionaire is far from altruistic and is not ready to “save” all troubled companies that have “gone too far,” attracting new customers with generous deposit yields.

Kaiko analysts warned of difficult times for crypto exchanges. In their view, platforms will weather the non-native market conditions, falling client activity and problems facing several industry players.

CoinFLEX sent a default notice to Bitcoin.com founder Roger Ver

Bitcoin.com founder Roger Ver owed CoinFLEX $47 million. The latter sent the “Bitcoin Jesus” a notice of default.

Earlier, the company’s head Mark Lamb said that issues arose with a long-standing client to whom a loan had been extended on special terms. He argued there was no liquidation price—the client provides liquidity. But amid the crisis, the position became unprofitable.

To repay the debtor and resume user withdrawals, CoinFLEX announced the Recovery Value USD (rvUSD) token.

Ethereum developers postponed the activation of the “difficulty bomb”

On June 30 in the Ethereum network at block #15 050 000 took place the Gray Glacier hard fork. The upgrade’s sole objective was to delay the activation of the “difficulty bomb” for 700,000 blocks.

Binance is conducting “rescue talks” with more than 50 companies

The cryptocurrency exchange Binance intends to assist industry participants facing a “slight liquidity crunch” and is conducting talks with more than 50 companies. CEO Changpeng Zhao told.

Earlier, BlockFi CEO Zac Prince noted that Binance’s US arm would lend a revolving credit line of $400 million to the lending platform and would obtain an option to acquire the company for $240 million.

Zhao noted that Binance could have been the first to seize the opportunity to acquire, but did not.

U.S. extradites former Monero developer Riccardo Spagni to South Africa

A court ordered former lead Monero developer Riccardo “Fluffypony” Spagni to surrender to the U.S. Marshals Service on July 5 for extradition to South Africa.

In July 2021 authorities arrested Spagni at Nashville airport, at the request of South African authorities, who accused him of fraud of $100,000. The case concerns not Monero but his work for the South African company Cape Cookies in 2009–2011.

Also on ForkLog:

• The head of the U.S. SEC confirmed Bitcoin’s classification as a commodity.
• Mark Cuban called the end of the bear market; Snoop Dogg and Mike Novogratz named benchmarks for ending the crypto winter.
• Grayscale filed suit against the SEC over the denial to convert GBTC into an ETF.
• Polkadot is modernising its governance structure.

What else to read and watch?

ForkLog analyzed the most relevant on-chain metrics and assessed what to expect for the price of the first cryptocurrency in the near- and mid-term.

Educational cards explained what DEX and staking and moving averages are. They also explained why the Stock52Flow model (S2F) is criticised and what happened with the Ronin sidechain.

In traditional digests, the week’s main events in cybersecurity and Artificial Intelligence were gathered.

The cryptocurrency industry attracts an increasing number of institutional players. New investments in infrastructure and growing attention to Bitcoin as an asset class are cited in ForkLog’s review.

On June 27, ForkLog LIVE discussed the latest news and the Bitcoin market in a live broadcast. Guests included traders Vladimir Koën and Ton Veis.

On June 29 another livestream discussed altcoins. Guests included trader Vladimir Koën, HyperFlex CEO and CTO Inshakov Nikita, Vladimir Maslyakov, and host of the Basovyy blok podcast Sergei Tikhomirov.

Read ForkLog’s Bitcoin news in our Telegram — crypto news, prices and analysis.