Week of Jul 19, 2022

How Volatile Capital Flows in Developing Economies Could Impact Bitcoin

The Bitcoin Economic Calendar 🗓

Market Commentary 💬 


After breaking below $19k last week, bitcoin bounced back on strong volume and had its second consecutive weekly close above $20,000. The traded volume was noteworthy, as it was one of bitcoin’s highest ever traded volumes. This is a good sign, as it means that the demand was able to absorb the selling and is now pushing prices higher. 

Better weather

It has now been over 2 months since the Luna/Terra collapse, and over 5 weeks since Three Arrows was suspected to be insolvent and crypto platforms Celsius and Voyager paused withdrawals. These events introduced a lot of uncertainty into the industry as there was a lot of speculation as to who else may have been impacted, and whether more forced sales of assets would be on the horizon. Over the last 2 weeks, a lot more information has become publicly available through the respective bankruptcy proceedings. As the information comes to light investors have been able to better assess the potential impact going forward. This has removed considerable uncertainty from the minds of investors, and it appears as though the majority of the forced liquidations that drove prices lower are mostly through. 

For abundant clarity, Ledn has not experienced any losses in our institutional or retail loan books to date. We did not have any lending relationships with Three Arrows, Celsius or Voyager and we review the financial position of our institutional counterparts routinely to verify that they are able to meet their obligations to Ledn. We recently published our most recent Proof-of-Reserves attestation with a certified public accountant. If you are a Ledn client, we invite you to log in and verify if you have not done so already.

Macro Tailwinds for Bitcoin and Crypto

Higher fuel prices, supply chain disruptions, an active conflict in Ukraine, and growth in the monetary base over the last 24 months (all the printing), has caused inflation to soar globally. 

As we covered here last week, inflation is slowly turning into social unrest, which, in turn, causes inflation to accelerate even more. This dynamic could lead governments around the world to intervene with their currency markets and set restrictions around their exchange rate. 

Treasury Secretary Janet Yellen echoed this sentiment last week in a statement - saying that emerging markets will face “volatile capital flows” - in plain english, this means that investors want to get their money out fast, and this puts enormous pressure on the local exchange rates that can’t absorb the demand for U.S. dollars. 

Governments that are bleeding capital to start closing the gates, and limiting or outright prohibiting people from protecting their savings. There are many good examples of this, but a good recent one is Russia. 

This is encouraging, fellow bitcoiners. Far from deterring the cause, these types of “bans” by authoritarian governments only act as a marketing campaign for its use locally. 

We are heading into some hostile territory for many global currencies. We said it last week and we’ll say it again: it is in these dire circumstances that I found bitcoin in Venezuela - and far from being a headwind, the coming months will be a reminder of why the world needs bitcoin.

S&P 500


As expected, Corporate Q2 earnings have been choppy. IBM’s earnings and the price action of its stock exemplify what we wrote about last week. Companies are beating earnings for Q2:

But they are warning of headwinds from a “strong U.S. dollar” and lowering their future guidance for the rest of the year and they are selling off as a result of it. 

Conversely, JP Morgan, the biggest bank in the U.S., gave a very rosy account of the state of the U.S. economy during their earnings call last week:

And conversely, Bloomberg reported that Apple is planning to “slow down hiring and spending for some teams next year”.  

Regardless of how spectacular earnings (and the U.S. jobs market) looks today, the reality is that the Fed is on a mission to cool down the economy in an effort to fight inflation. 

The Fed’s next meeting is on July 26-27, and the European Central bank meets this week. The ECB is expected to raise interest rates for the first time in 11 years after the Euro broke below parity with the U.S. dollar. 

Until then, we continue to get earnings data from publicly listed companies that will likely sound a lot like IBM - great quarter, weak guidance. This could continue to add pressure on equity markets until the next Fed meeting.


Gold was down for a 5th consecutive week, closing lower by 2% at $1,741/oz. The move was greatly driven by the strength of the U.S. dollar. The U.S. dollar index finished last week higher by +1% yet again. 

As we mentioned in the previous issue, the recent rally in the U.S. dollar is not necessarily due to better real returns for U.S. treasuries (yields on U.S. bonds have remained flat). Rather, the demand for the greenback is being driven by global turmoil and pressure facing foreign currencies in emerging markets. 

This is a trend that looks poised to continue until the Fed reverses its course. Higher interest rates in the U.S. will only make the U.S. dollar stronger - which should continue to put a headwind on gold prices for the weeks to come.


A pretty decent week of recovery for ETH and its main DeFi applications while Ethereum developers doubled down on a September target for "The Merge" - the upgrade on the network that will make the transition from Proof-of-Work to Proof-of-Stake consensus mechanism.

One of the main core developers from Ethereum Foundation, mentioned September 19th as the suggested date by the core team in the latest meeting occurred last Thursday having no objections from other relevant members:

The meeting minutes of the developers latest call can be found here with further details regarding the much expected network transition.

Ethereum continues to lead the TVL metrics in the DeFi space, representing more than 64% among all blockchains:

On the stablecoins front, USDC continues to expand and drastically increase its market share against USDT: 

Less than 2 years ago Tether had nearly 80% of dominance, dropping to less than 44% as of the latest stablecoin metrics indicated below: 

While the market stabilizes itself after tough weeks of uncertainties and contagion effects, at Ledn we continue to be extremely diligent with the assets we work with in our platform, always putting the safety of our users' funds above any other aspect.


During the past weeks, we’ve been covering the status of Bitcoin miners’ BTC holdings. As measured by Arcane Research, public miners sold about 400% of their BTC production in the month of June alone.

That is ten to twenty times the amount that miners were selling at the beginning of this year. Some public miners have sold their holdings while others haven’t. Core Scientific and Bitfarms are the ones that sold the most BTC during June.

Taking into account the most recent reduction of their holdings, public miners now own approximately 11,000 less BTC; a 23% reduction.

What drove certain miners to reduce their holdings? On one end there’s the increase in cost of capital, while on the other it’s been machine-backed & Bitcoin-backed loans. No wonder the biggest sellers were also the biggest borrowers.

What's Ahead

This week we will get an interest rate decision from the ECB, corporate earnings from Netflix, Tesla, Twitter, and Chinese regulators intervening to stabilize the local real estate market - details shortly. 

On the bitcoin side, the futures markets continue to price in quite a bit of uncertainty - however, the curves are now starting to look more “normal” and slope upwards and to the right. 

Investors should expect the weeks ahead to continue being volatile given the volatile macro environment and the upcoming Federal Reserve meeting on July 26-27th.

For now, here are the earnings and announcements that could move the markets in the week ahead:


Earnings: Netflix


Earnings: Tesla


Earnings: Twitter

It's a big week coming up, and as always, we'll keep you posted on any relevant news throughout the week right here and from our Twitter account.

This article is intended for general information and discussion purposes only, it is not an offer, inducement or solicitation of any kind, and is not to be relied upon as constituting legal, financial, investment, tax or other professional advice. This article is not directed to, and the information contained herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution, publication, availability or use would be contrary to law or regulation or prohibited by any reason whatsoever or that would subject Ledn and/or its affiliates to any registration or licensing requirement. This article is expressly not for distribution or dissemination in, and no services are being marketed or offered to residents of, the European Union, the United Kingdom or the United States of America. A professional advisor should be consulted regarding your specific situation. Digital assets are highly volatile and risky, are not legal tender, and are not backed by the government. The information contained in this publication has been obtained from sources that we believe to be reliable, however we do not represent or warrant that such information is accurate or complete. Past performance and forecasts are not a reliable indicator of future performance. Any opinions or estimates expressed herein are subject to change without notice. We expressly disclaim all liability and all warranties of accuracy, completeness, merchantability or fitness for a particular purpose with respect to this article/communication. For full legal terms and conditions visit https://ledn.io/legal

About the author

Mauricio Di Bartolomeo

Mauricio is the co-founder and Chief Strategy Officer of Ledn.io. He grew up in Venezuela where he and his family learned about Bitcoin. Now based in Canada, Mauricio holds HBA and MBA degrees from the Richard Ivey School of Business in London, Ontario in Canada.