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- 🥜 Why crypto's nuking
🥜 Why crypto's nuking
PLUS: Liquidation cascade
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GM to all 96,759 of you. Crypto Nutshell #547 stayin’ stoic… 🗿🥜
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What we’ve cooked up for you today…
🏦 Largest liquidation ever
🍌 Why crypto’s nuking…
📉 Expect further drops
💰 And more…
Prices as at 3:15am ET
LARGEST LIQUIDATION EVER 🏦
BREAKING: Bitcoin Tumbles 8% to $93K With Billions Liquidated due to Trump's Trade War
Well that’s a rough start to the week…
At the time of writing, literally everything is down. 😱
In the last 24 hours:
Bitcoin is down ~6.47% trading at $93,183
Ethereum is down ~20.30% trading at $2,475
XRP is down ~24.50% trading at $2.15
Solana is down ~8.71% trading at $191.65
It’s a blood bath out there…
In fact this crash has been so severe that it’s the largest liquidation event in the history of crypto.
In total ~$2.18 billion has been liquidated from the crypto market. (So far…)
Which is absolutely nuts when you think about it.
This liquidation event has been LARGER then the liquidation event following the collapse of FTX… 🤯
Crypto Nutshell Pro Tip: Let this be another reminder to NEVER use leverage
So what’s going on this time? Why is crypto nuking? 🤔
Over the weekend, Trump announced 25% tariffs on Mexican & Canadian goods, and a further 10% tariffs on Chinese imports.
(These tariffs are in effect as of Monday)
In retaliation, Canada imposed matching 25% tariffs on $155 billion worth of US goods.
A full blown trade war has emerged…
As these announcements were made over the weekend, and crypto is one of the only markets that trades 24/7…
Investors began to dump one of the only assets that they could…
With these tariffs now in place, the market is expecting that the Fed will have to maintain higher rates throughout 2025.
What happens next?
Well, right now there is a huge degree of uncertainty around how the tariff trade war will play out.
No one knows how long it’s going to last.
And remember, markets hate uncertainty.
But we do know that Trump is set to hold talks with Canada and Mexico regarding the tariffs.
At the end of the day, we’ve seen crashes of this level numerous times throughout previous bull markets. (It doesn’t get any easier…)
But the big picture stays the same.
Your job is to not get shaken out along the way. (We know that’s a lot harder than it sounds)
And please, don’t use leverage. 😎
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WHY CRYPTO’S NUKING… 🍌
Want to know the real reason crypto is nuking?
It’s entirely the fault of one man:
Raoul Pal.
Raoul Pal is a renowned macroeconomic expert & one of the biggest figures in crypto.
He’s best known in crypto for coining the term the ‘Banana Zone’.
The ‘Banana Zone’ in simple terms, refers to the year following a Bitcoin halving, in which crypto rips parabolically up.
The 'Banana Zone' hit in 2013, 2017, & 2021 - Raoul expects it to return throughout 2025.
So why is Raoul to blame for the crypto crash?
Well, last night at a crypto conference in Miami, Raoul decided it was a great idea to jump on stage and start euphorically dancing alongside 3 giant bananas:
I'm sorry, it was my fault the market dumped.
— Raoul Pal (@RaoulGMI)
11:33 PM • Feb 2, 2025
As history has proven, the Universe has zero tolerance for such reckless displays of euphoria.
Naturally, crypto nuked. 😂
In all seriousness, corrections like this are normal & expected - you don’t get 10-100x gains without enduring 30-50% pullbacks.
Bitwise CEO Hunter Horsley nailed the current situation:
EXPECT FURTHER DROPS 📉
Time for a check-in on the Long/Short-Term Holder Threshold.
Here’s how this metric works:
🔴 Short-Term Holders (STHs): coins that have been held for less than 155 days
🔵 Long-Term Holders (LTHs): coins that have been held for more than 155 days
🟥 Short-Term Holder Cost Basis: all coins purchased in this price range are STHs
🟦 Long-Term Holder Cost Basis: all coins purchased in this price range are LTHs
This metric is extremely powerful as we can see exactly what price STHs and LTHs purchased Bitcoin at. 🔎
The LTH / STH threshold is currently at 18th August 2024, when Bitcoin was ~$57,320.
All coins purchased before this date are classified as LTHs.
All coins purchased after this date are classified as STHs.
Today, there are currently 13,101,484 Bitcoin in the hands of LTHs. (66.10% of the circulating supply) 💪
Whereas the amount of coins held by STHs is only 3,981,430. (20.09% of the circulating supply)
Over the last two weeks, both of these values have remained relatively stable.
However…
With Bitcoin’s recent price action, we’re expecting the amount of short-term holders to sharply decline.
Remember, STHs typically react more emotionally to rapid price movements compared to LTHs. (As you can see in the chart above)
But as explained in the previous section, we believe this is only a temporary bump along the road.
CRACKING CRYPTO 🥜
Ripple's XRP omitted from Hong Kong regulator’s approved list of cryptos. A shadow of doubt is cast upon its regulatory standing in the Chinese special administrative region of Hong Kong.
India may change crypto policy due to international adoption. The Indian government has a reputation for being harsh on crypto, but a regulatory sea change in the United States may cause a pivot.
Tether Reports $13B Profit for 2024, With Rising Bitcoin, Gold Prices Contributing. The group also increased its bitcoin holdings last quarter for the first time since March, holding nearly 84,000 BTC.
Raydium overtakes Uniswap in monthly DEX volume after memecoin-heavy January. Solana-based decentralized exchange Raydium RAY -12.45% claimed a 27% share of all DEX volume in January.
WHAT WE’RE READING 📚
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The Neuron (link) - AI trends and tools to keep you ahead
CAN YOU CRACK THIS NUT? ✍️
Select your answer below and you’ll be redirected to the results page. (answer explanation can be found after “Meme Corner”)
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MEME CORNER 😂
Because what would the crypto world be without its share of memes?
Trivia Answer: B) Storing the blockchain and validating transactions 🥳
A Bitcoin node is a computer that runs Bitcoin software, essentially acting as a participant in the Bitcoin network by validating transactions, relaying them across the network, and maintaining a complete copy of the blockchain
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