Crypto: 3AC reportedly receives liquidation order; MicroStrategy buys more Bitcoin; Michael Burry tweets
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Crypto VC hedge fund Three Arrows Capital (3AC), one of several cryptocurrency firms in rough financial seas, has reportedly now been officially ordered to liquidate.
According to Sky News, which broke the story today, “a person familiar with the situation” confirmed that a court order in the British Virgin Islands was made on June 27 to liquidate the crypto firm.
It’s a developing story and further details on this are scarce at the time of writing, but if true, it will only confirm what most in the crypto industry already suspects is more than likely to happen.
It’s been widely reported that the Singaporean crypto hedge fund, led by well-known industry identities Su Zhu and Kyle Davies, has failed to meet margin calls from its lenders amid the bearish market conditions this year.
And since we began covering 3AC’s woes a couple of weeks ago, the figure of liquidations it’s incurred across multiple positions had grown to an estimated US$400 million.
Adding to that, earlier this week crypto brokerage Voyager issued a default notice to 3AC for the latter’s failure to pay back a hefty loan. And when we say hefty, we’re talking more than US$670 million in a combo of USDC and BTC. Ouch.
Yeah, that’s right. Laser-eyed Bitcoin gigabull Michael Saylor has just tweeted that his business-intelligence software company MicroStrategy (MSTR) has bought yet more BTC.
Cue the DiCaprio Wolf of Wall Street “I’m not leaving” memes… you know the ones.
— $RealADAWhale (@RealADAWhale) June 29, 2022
The firm’s latest purchases have been made over the past two months – from May 3 to June 28 – bought for an average price of US$20,817 per coin.
The new additions bring MicroStrategy’s holdings to 129,699 BTC acquired for $3.98 billion – at an overall average cost of $30,664 each.
Bitcoin is trading for US$20,100 at the time of writing, which makes the company’s holdings worth about US$2.6 billion. Um, only down about 1.38 billion dollars then…
Here’s Saylor on CNBC recently, dismissing chatter about MicroStrategy feeling the financial heat, and about how these levels are “an ideal entry point to buy Bitcoin”…
He looks a shade of red in that clip… probably just needs to swallow up more Bitcoin, get himself a nice orange hue.
Hang on… here’s something else that’s caught our eye. Famously blunt US hedge-fund investor Michael “Big Short” Burry posted an interesting tweet the other day. And it’s a potential slice of market hopium, which might be flying slightly under the radar.
This supply glut at retail is the Bullwhip Effect. Google it. Worth understanding for your investing endeavors. Deflationary pulses from this- -> disinflation in CPI later this year –> Fed reverses itself on rates and QT –> Cycles. https://t.co/PHCgoOOvlD
— Cassandra B.C. (@michaeljburry) June 27, 2022
The famed housing-bubble soothsayer cites a phenomenon known as “the Bullwhip Effect“, which like he suggested, we had to Google.
Essentially, it refers to the deflationary effects of retailers holding too much inventory – too much stock. The theory there is that retailers will eventually have to drop prices to rid themselves of their overly stockpiled goods.
Anyway, the upshot is, Burry seems to be indicating this effect is a precursor or catalyst of sorts for a change of course from the US Federal Reserve. A reversal of its inflation-combatting, interest-rate-hiking, quantitative-tightening measures that are defining the year’s crippling bear market to date.
When? “Later this year”, he suggests. Soooo… a possibly more bullish turn of events for sold-off equities, bonds and crypto come November/December? Thinks that make you go hmm.
Might have to ride out some more pain and/or sideways action until then, though, especially if more of those “crypto contagion” stories (see 3AC above) materialise.