12 Jul 2022

Celsius repays its Maker loan and hires restructuring lawyers

Distressed crypto lender Celsius has repaid its Maker loan of $440m, releasing 21,962 WBTC worth of collateral.
On June 12th, lending platform Celsius halted withdrawals citing challenging market conditions. Celsius had significant exposure to illiquid staked ETH and also staked ETH proxy STETH, in addition to publicly known loans with WBTC collateral through Maker.Celsius has recently reshaped its entire board and has hired restructuring lawyers from Kirkland & Ellis LLP, who also serves as restructuring lawyers for Voyager’s chapter 11 filing. Additionally, last week Jason Stone filed a lawsuit against Celsius last week related to potential fraud by Celsius.Last week, Celsius repaid its Maker debt, freeing 21,962 WBTC worth of collateral. This collateral may be sold OTC to meet creditor demands and customer withdrawals. The freed-up WBTC, in addition to Celsius ETH holdings, has been sent to FTX, Binance, and Coinbase wallets, and the wallets have since received stablecoins, possibly to pay off further DeFi debts.Since May 12th, the WBTC supply has declined by 31,435 BTC, and it has fallen by 5,000 BTC since Celsius repaid its Maker debt, suggesting substantial WBTC redemptions recently. The circulating WBTC supply has now declined to its lowest level since late November 2021. On April 28th, we published an article commenting on the relevancy of the abundant BTC supply available through alternative investment vehicles, pointing fingers at WBTC, Purpose, and GBTC, among other vehicles. Recent events and the current Celsius unwinding confirms that exchange balance is far from sufficient when assessing the full scope of bitcoins market liquidity.
Our liquid tradable BTC proxy below 20% for the first time since April 2021
The liquid tradable BTC proxy introduced by us in April has declined to a 15-month low of 19.8% amid the massive redemptions experienced in recent months.
Source: Glassnode, Skew, Dune, MicroStrategy, Tesla, Square, Meitu, Aker, Bytetree, VanEck, Proshares, Hashdex, StatusInvest
As mentioned briefly above, we published an article in April exploring and providing context to why traders should be cautious when interpreting on-chain narratives covering bitcoin.While exchange balances have seen a steady and sustained decline, from 17% of the circulating supply to 12.5% in the last two years, our liquid tradable BTC proxy has been far more elevated, reaching highs of 21.7% on January 26th. However, since, and in particular, in the last two months, the liquid tradable BTC proxy has seen a sharp decline, falling below 20% for the first time since April 2021. This decline is caused by large redemptions in WBTC and the Canadian BTC ETFs, in addition to the declining exchange balances.
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