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Crypto Hedge Fund 3 Arrows Capital (3AC) Files For Bankruptcy

Crypto hedge fund 3 Arrows Capital is slated to be another pillar piece of 2022’s bear market headlines, joining the likes of brutal bear market moments that include Terra Luna’s downfall and CeFi’s drama.

While rumors have swirled for several weeks now about 3AC’s status, limited details with concrete information have been released. That’s evolving to close out this week, as new reports have shown that 3 Arrows Capital is filing for Chapter 15 bankruptcy in New York.

A Dozen Headaches & 3 Arrows Makes For Chapter 15

In a bull market, it can all be rainbows and sunshine – and 3 Arrows was certainly seeing that with an AUM at around $10B earlier this year. As the tides have shifted this year, though, so too has the business operations.

The unraveling began in early June with speculation that 3AC was failing to make owed payments, headlined by ~$80M owed to derivatives exchange Deribit. Following roughly a week or so of silence from 3AC co-founders Zhu Su and Kyle Davies, Su posted this this tweet, essentially confirming that 3AC was facing serious liquidity issues:

It’s been dominos ever since. CeFi platform Voyager Digital stated that they could lose in excess of $650M due to the 3AC collapse, according to the Financial Times; the platform has since suspended withdrawals and trading. Fellow CeFi player BlockFi also sustained roughly $80M in losses, according to the Times.

This week, 3 Arrows filed for Chapter 15 bankruptcy in New York, following liquidation as well as regulatory inquiries from Singaporean officials, where the hedge fund is based. Chapter 15 is geared towards addressing “cross-border insolvency.”

Strong headwinds for Bitcoin (BTC) this year have exemplified the crypto market’s uphill challenges recently. | Source: BTC-USD on TradingView.com

Related Reading | Leading Crypto Exchanges See Negative Funding Rates, Have The Bears Taken Over?

State Of CeFi: Pulse Check

Centralized finance platforms, commonly referred to as CeFi, aim to take the utility of DeFi and integrate easy-to-use mechanisms and UI to attract more casual consumers with aggressive yields. However, speculation has surrounded a bevy of these firms as speculators suggest that their loans are high-risk and that their liquidity is volatile.

Then comes the subsequent problem – where even if liquidity isn’t an immediate issue for a CeFi platform in a downturn, users belief in potential liquidity concerns leads to a bankrun, and now liquidity becomes an issue because of mass withdrawals. Many believe that some CeFi platforms have engaged in riskier processes to generate yield, which adds another layer of complexity, and for platforms with ties to VC firms like 3 Arrows Capital, things only get even cloudier.

Related Reading | Can This Bitcoin Ratio Have Hints For A Bottom?

Featured image from Pixabay, Charts from TradingView.com
The writer of this content is not associated or affiliated with any of the parties mentioned in this article. This is not financial advice.

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Can This Bitcoin Ratio Have Hints For A Bottom?

Past trend of the Bitcoin actual/realized price ratio may be forming a pattern that could hint at a possible bottom for the crypto at $17k.

Bitcoin Actual/Realized Price Ratio Currently Has A Value Of 0.8

As pointed out by an analyst in a CryptoQuant post, historical data of this BTC ratio may have interesting implications for the current market.

The realized cap is a capitalization model for Bitcoin that multiplies each coin in the circulating supply with the price at which the coin was last moved and takes the sum of all the values. This is different from the usual market cap, where the entire supply is simply multiplied by the current price of BTC to get the capitalization.

Now, from this realized cap, a “realized price” can also be obtained by dividing the metric with the total amount of coins in circulation.

Related Reading | New Bitcoin Record Paints Incredibly Bearish Picture As BTC Struggles At $19,000

The “actual/realized price ratio” is, therefore, an indicator that measures the ratio between the normal price of BTC and this new realized price.

Here is a chart that shows the trend in this Bitcoin ratio over the last few years:

Looks like the actual price is lesser than the realized one at the moment | Source: CryptoQuant

In the above graph, the quant has highlighted the major bottoms during previous Bitcoin cycles and the value of the actual/realized price ratio at which they occurred.

Looking at the chart, it seems like during the 2015 bottom, the value of the indicator was about 0.6. And in the 2018 bottom, it was about 0.67.

Related Reading  | Why Bitcoin Could Collapse Another 50%, Says Michael “Big Short” Burry

Currently, the metric has a value of 0.8, which means the price of the crypto is around 80% of the realized price right now.

If there is a pattern here with the actual/realized price ratio, then the bottom this time may also form at a value 0.07 higher than the previous time.

This would put the ratio at about 0.74, which implies Bitcoin will need to decline further until $17k before this “bottom” value is reached.

Naturally, this would only happen if there really is such a pattern present here. Another indicator, the delta capitalization model, suggests that $15k could be a possible lower bound for a Bitcoin bottom.

BTC Price

At the time of writing, Bitcoin’s price floats around $19.2k, down 10% in the last seven days. Over the past month, the crypto has lost 35% in value.

The below chart shows the trend in the price of the coin over the last five days.

The value of the crypto seems to have been going down over the last couple of days | Source: BTCUSD on TradingView
Featured image from Michael Förtsch on Unsplash.com, charts from TradingView.com, CryptoQuant.com

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Greek Artist Sends Pro-Freedom Message with Assange NFT Drop

Esteemed artist Miltos Manetas will tokenise 50% of his Julian Assange portraits, with the goal of raising awareness for the imprisoned activist. To further cement the blockchain connection, proceeds of the NFT drop will enter a DAO that forms part of the Venice Biennale Festival’s Internet Pavilion, a tech tent founded by Manetas in 2009.

Named This Cannot Be Erased, the special collection of 111 NFTs will grant buyers access to one-of-one digital versions of hand-painted portraits created by Manetas over the last two years. The collection will be divided into three phases during which 37 tokens are to be minted on the Materia blockchain, starting June 23.

This year’s Venice Biennale, now in its 59th year, runs from April 23 to November 27. While the majority of tents at the festival are reserved for countries, the Internet Pavilion is dedicated to Assange under the theme “AIIA – Assange is Internet Internet is Assange.”

Manetas Aims to Leverage #AssangePower

This Cannot Be Erased was produced by Manetas with support from long-time collaborator Howie B, a British composer who scored the original Internet Pavilion event thirteen years ago. Back then, Manetas and curator Jan Aman stirred controversy by inviting a number of people involved with activist website The Pirate Bay to Venice to inaugurate the Embassy of Piracy.

The latest collection develops Manetas’ interest in freedom in the internet age, with the artist having continually voiced his support for a man he regards as a close friend. The painter, whose digital works have previously appeared on VR platform Second Life, likens the silencing of the WikiLeaks founder to governments attempts to crush dissent on the World Wide Web, leading to the aforementioned theme for this year’s Internet Pavilion: Assange is Internet Internet is Assange.

The 111 NFTs in the collection are curated digital versions of the Assange portraits the artist created as part of the #AssangePower social media campaign. That blitz led Manetas to showcase his creations at Rome’s Palazzo delle Esposizioni and later Belgium’s IKOB Museum with an exhibition entitled Assange Situation – Emergency.

This year, the location of the Internet Pavilion is the vast, prison-like domain of The Gervasuti Foundation, which Manetas considers an appropriate setting given Assange’s ongoing incarceration. The Foundation is located at the north end of Via Garibaldi, on the site of the Gervasuti family artisan wood workshop.

Holders of This Cannot Be Erased will not only own a piece of art history; they’ll also become Trustees of AIIA, with the NFT designated a “currency” of a new internet “country” unbound by borders or barriers. As mentioned, money raised from the sale will go into the Internet Pavilion DAO, meaning art collectors can help decide which art projects the Pavilion funds in the future.

Assange in Limbo

Miltos Manetas has said that his goal is to raise awareness of Assange’s treatment, believing that he has been unjustly demonised for his whistleblowing activities. This view is echoed by human rights organisation Amnesty International, which calls the UK’s decision to extradite Assange to the US a “travesty of justice.”

NFT that make up the new collection last for a minute, during which time the holder sees the face of Assange, fracturing before rapidly coming back together, never to erase. Each artwork is accompanied by a musical theme composed by Howie B.

Assange is currently appealing the UK government’s extradition ruling. If the appeal fails, the activist could face a 175-year prison sentence if convicted in a US court.