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Arthur Hayes says investors should expect more forced selling of cryptos

  • Former BitMex CEO claims that a Bitcoin recovery is not about to happen.
  • Long-term BTC holders may have more opportunities to buy the coin at a bargain price.

According to ex-BitMex CEO, Arthur Hayes, there is likely to be more intense selling of cryptos in the near term. Referencing a popular quote from Warren Buffet, Hayes suggested that the market is trying to figure out who is swimming naked. Buffett’s explanation of that quote is that the outgoing of a tide usually exposes the risks and weaknesses of certain firms.

This piece of wisdom from Buffett is particularly applicable to the current crypto market situation. Leading players like Celsius and Three Arrows Capital (3AC) are displaying huge signs of weaknesses. If this trend continues, many other top industry players will likely follow the steps of celsius and 3AC.

Related: Another disaster waiting to happen? Babel finance suspends crypto withdrawals

Hayes’ interesting analysis

Hayes noted that the total BTC holdings of Canada’s purpose Bitcoin ETF are down by nearly 50 percent as of last Friday. The fund had about 43,701 BTC as of June 1, 2022. Hayes added that that’s a lot of physical BTC to sell within a short period. Over the weekend, the Bitcoin price plummeted to $17,600, representing a 20 percent decline within a couple of hours.

The $17,600 price represents its lowest since December 2020. However, Hayes claimed that the drop indicates that a forced seller triggered several stop-loss orders. The leading digital asset currently trades at $20,512, according to our data.

However, Bitcoin bulls shouldn’t expect that Bitcoin is on a recovery path yet. Hayes added that there may still be more forced selling. According to him, some crypto lenders have poor risk management and over-extended lending terms.

As reported here on CNF, the ex-BitMex CEO predicted that the price of many altcoins would drop by at least 50 percent in the next few weeks. Popular altcoins such as Solana and Polkadot are about 90 percent off their peak price following a painful bear market.

The correlation between US stock and cryptos broken

Popular Asia-based crypto journalist, Collins Wu (@wublockchain on Twitter), has claimed that there is no longer a similarity between US stock and cryptos. According to him, Nasdaq 100 has dipped nearly 11.4 percent since the start of this month.

By comparison, Bitcoin and Ethereum have dipped 35.8 percent and 44.5 percent, respectively, within the same period. US stocks and cryptos’ price action have been similar until June 11. However, there was a sharp decline in the crypto market after June 11.

Wu claims that the intense selloffs by institutional crypto investors are responsible for this sharp decline. Also, the rate increase by the US Fed is another factor for this differing price action. As the rate rises, investors’ appetite for riskier assets such as crypto becomes lower.

Nevertheless, Hayes remarked that some skilled investors might use the current crypto market conditions to increase their BTC holdings. Each decrease in BTC price has seen many BTC holders trying to cut their losses by liquidating their BTC portfolio.

Der Beitrag Arthur Hayes says investors should expect more forced selling of cryptos erschien zuerst auf Crypto News Flash.

Lightning: why do we need decrementing timelocks in multi-hop payments?

The video (at 28:25) from the official Lightning website describes a multi-hop payment. I understand what a hash-locked contract is, but I still don’t understand why we need a timelock aspect here. As you see on the slide, in a multi-hop payment A -> B -> C -> D, (A -> B) has a 3-day::Listen

The video (at 28:25) from the official Lightning website describes a multi-hop payment. I understand what a hash-locked contract is, but I still don’t understand why we need a timelock aspect here. As you see on the slide, in a multi-hop payment A -> B -> C -> D, (A -> B) has a 3-day nLockTime, (B -> C) has a 2-day nLockTime, and (C -> D) has a 1-day nLockTime. nLockTime of time t means that the transaction can not be included in a block earlier than t. So as time passes, first the (C -> D) becomes valid, then (B -> C) becomes valid, then (A -> B) becomes valid.

Joseph Poon says at 28:35 (emphasis mine):

“Dave’s and Carol’s channel […] closes first. And Carol is happy with this setup, because she knows that her payment closes out […] before her money gets pulled.”

Isnt’s it the other way around: Dave pulls money from Carol first (between day 1 and day 2), and then Carol pulls money from Bob?

Anyway, what would go wrong if we got rid of timelocks altogether? Say, Dave generates a random R, sends H(R) to Alice, Alice creates a hash-locked transaction and broadcasts it to Dave via Bob and Carol. If Dave discoses R, everyone can withdraw their funds, if he doesn’t, no one can. Why do we need timelocks on top of that?

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Arthur Hayes says investors should expect more forced selling of cryptos

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