Picking Up the Pieces — May 20

Chart of the Day

Market Meltdown. The Bitcoin market witnessed a historical sell-off as the price of BTC nosedived below $30k, triggering an unusual magnitude of losses realized by short-term holders. The short-term holder SOPR has only dipped this low on three occasions since 2015 — the start of bears in 2018, the capitulation same year, and the March liquidity crunch in 2020. Despite multiple red flags in the on-chain metrics, market participants were simply paralyzed by massive exchange outages across major platforms that led to close to $8 billion in liquidation. On the chart, it doesn’t look as abysmal as what we experienced in mid-April, but close enough.

Talk of the Town

Second Time as Farce. A cruel moment of comic relief unfolded amid the grim market prospect as crypto lender BlockFi mistakenly sent out user rewards in bitcoin, which was originally intended to be in USD. BlockFi is currently working with its users to reverse the excess bitcoin rewards, though legal precedence appears to not be on their side, as a similar incident last year concluded with Citi’s failure to recoup the botched Revlon payouts of $900 million, according to a U.S. federal judge. Another key difference? There is no backsies in the blockchain.