Another domino fell this morning in the ongoing crypto collapse.
Lending arm of crypto investment bank, Genesis, halted customer withdrawals. “Basically, they’re insolvent,” says Bitcoin Mining analyst Rob Simone on The Call @ Hedgeye this morning in the video above. This is an important one to watch, Simone continues, because the sponsor of Genesis is a company called DCG, Digital Currency Group. DCG is the sponsor of the Grayscale Bitcoin Trust and other Grayscale crypto products.
Simone asks an important question for the broader crypto ecosystem. “The question that I would have is what guarantees were made by DCG down the stack to the lending subsidiary and what would that mean under insolvency? And then what would that mean for the broader ecosystem in terms of the other units they sponsor?”
Zoom out even further, says CEO Keith McCullough. “What day did Lehman Brothers or Bear Stearns happen versus the low of the stock market crash.”
Reality…
- Bear Stearns: March 16, 2008 (sale to JPMorgan)
- Lehman Brothers: September 15, 2008 (files for bankruptcy)
- When did the S&P bottom? Nearly a year after the Bear Stearns sale on March 6, 2009.
Another question. How far did the S&P 500 fall from those dates?
- From the Bear Stearns sale to JPMorgan to the lows, the S&P fell -55%.
- From the Lehman Brothers bankruptcy filing to the lows, the S&P fell -48%.
As we’ve been saying since #Quad4 conditions hit U.S. financial markets in January, the riskiest assets are the first to collapse in The Mother of All Bubbles. Sort of makes you think. Hmmmm…
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