Official Bear Market, Celsius Holds Assets and the Luna/Terra Contagion Continues...

Ares Intel Report #3

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Dear Investors -

Welcome back to another report! Hope everyone had a wonderful weekend. We’re back again after our busy trip to Consensus 2022 in ATX (hosted by CoinDesk). It was an incredible opportunity to meet and partner with some of the leading minds pioneering the future of Blockchain. Despite the massive drawdowns we’ve recently experienced (60%+ down from all-time-highs) we at Ares have never been more bullish. Despite the Luna/UST collapse contagion, Celsius withdrawal restrictions, mass layoffs across crypto, 3AC insolvency, etc., we’re here to pierce the vail and deliver the intel you need to stay ahead of the narrative. Let’s dive in!

BLUF (Bottom Line Upfront)

• Contagion from the Luna/UST collapse continues to spread.

• Celsius paused withdrawals

• 3 Arrows Capital insolvency / margin call

• Crypto Lender Babel Finance halts withdrawals

• The Fed hikes interest rates by 75 bps - public equity markets have already priced in at least two substantial rate hikes.

• Continued selling pressure and rapid capitulation has exacerbated losses and margin calls across the board, as large financial institutions and CEX’s experience liquidity issues.

• BTC new trading range and support is at $20k mark.

Equity Market Update

The Fed’s most recent rate hike made the market do a complete 180 from the relief rally yesterday. This is the biggest rate increase since 1994! Despite this massive raise, we are still technically behind the curve, and should expect to see large hikes further down the horizon.

Chairman Powell made it clear during the last meeting that the Fed can influence demand, but not supply, especially that of commodities. With the continual rising cost of capital however, we do see an intersection as far as commodity impact.

“If you were to get inflation on its way down to 2%, and unemployment up to 4.1%, that’s still a historically low level. … 3.6% is historically low in the last century … So a 4.1% unemployment rate, with inflation well on its way to 2%, I think that would be a successful outcome.”

Fed. Chairman Jerome Powell, 15 July 2022