When we started this newsletter, we took a solemn oath.

To bring you the crypto news of the day, whether it was good or bad.

And today, we’re going to examine some bad news. Why is Bitcoin dropping?

But what may seem like a storm cloud for crypto… actually has a silver lining.

More in the deep dive.

Espresso Shots

☕️ Celsius Auction Nearing Close

The end is in sight for the auction of the assets of bankrupt crypto lender, Celsius.

When Celsius filed for Chapter 11 in July of 2022, the crypto lender had 1.7 million registered users and 300,000 active users with at least $100 in their accounts.

Since the auction began on April 22nd, Celsius’s auction price has increased by hundreds of millions since the initial bid by NovaWulf LLC, a digital investment firm.

The current, leading bid was offered by Fahrenheit LLC, a service firm that includes a blockchain-based venture capital division.

Though the auction is positioned to close in just a few days, we all know that an auction isn’t really over until the fast-talking southern guy with the little hammer gets in his car and drives away.

☕️ Chinese Crackdown on NFTs

The Supreme People’s Procuratorate of the People’s Republic of China, the arm of the government responsible for legal innovation, published an article on what they think should be done about NFTs in China.

And that, namely, is to crackdown on a trend that they see as leading to schemes and illegal activities, such as pyramid schemes.

Rather than genuine innovation, the Chinese government sees NFTs as “pseudo-innovation.”

But Mainland China’s anti-NFT rhetoric stands in stark opposition towards Hong Kong’s legislative moves toward becoming a crypto hub. Much like how America’s laws differ state-to-state, each Chinese province may have wildly different rules.

So essentially, you can have your digital artwork depicting anime girls smoking hand-rolled cigarettes in Hong Kong, but as soon as your waifu leaves city limits, she will be shot on sight.

☕️ UK May Regulate Crypto Like Gambling

In the wake of the EU’s MiCA decision, the UK Treasury is still urging the government to regulate crypto like gambling.

The UK treasury committee found that crypto “more closely resembles gambling than a financial service, an impression reinforced by the evidence we have received of consumer behavior.”

And if crypto is regulated like gambling in the UK, it will also be highly taxed like gambling. The taxes on gambling in the UK go to gambling addiction recovery programs and debt advice services.

This recommendation has been met with vocal criticism, such as that of Phinom Digital co-founder Ivan Ivanchenko who said, “treating cryptocurrency trading as gambling would be a backward step for the UK’s digital currency aspirations and another demonstration that the country is fast becoming a sea of red tape.”

On the bright side, if the UK starts treating crypto like gambling maybe they’ll start treating gambling like crypto and you’ll be able to afford a down payment on a house with just a few poker chips.

Spilling the Beans

Why Bitcoin Dipped 📉 👀

Just a few short months ago, it felt like we were all talking about Bitcoin’s big bull run.

And we got that run… for a while.

Though Bitcoin climbed deep out of the cave it was hibernating in through cryptowinter, rocketing up from around the $16,000 mark to hover around $30,000.

Bitcoin’s been dropping, precipitously.

Currently we’re much closer to the $27,000 marker than the $30,000.

And why?

Well, in part because this has to do with the natural fluctuations of the market. Bear markets follow bull markets in an endless cycle.

You can’t have day without night. Warmth without cold. Good without evil.

It’s a property called différance coined by French philosopher and deconstructionist, Jacques Derrida. We only understand things by what they’re not.

Now, moving on from reflections on the nature of being, if this isn’t just normal market behavior, why is Bitcoin dipping?

And more importantly, how can you profit from it?

The other major contributing factor to Bitcoin’s lowering price is its liquidity.

Liquidity refers to the ease of buying or selling an asset without causing substantial impact on its price (up or down).

When a crypto is popular and the community trading it proportionally grows in size, that crypto’s liquidity goes up.

When consumers panic and lose confidence in a cryptocurrency, money goes off the blockchain and that crypto’s liquidity dries up.

Now, there is a recent trend that may be to blame with consumers losing confidence in Bitcoin.

The Bitcoin withdrawal freezes, long wait-times, and backlog of pending transactions that congested the Binance servers to temporarily shut down Bitcoin withdrawals several times in early May were both frustrating and well-publicized.

Investors don’t like when they can’t get their money out and the market reacted accordingly.

So, instead of breaking through that $30,000 ceiling again, Bitcoin dropped to the $27,333.50 price point where it sits at the time of writing.

But this doesn’t have to be a bad thing. Think of this less as a drop in Bitcoin’s price and more like a Bitcoin sale.

If you don’t own BTC already, it could be a good time to purchase some before the next bull run.

And some speculators believe that Bitcoin may be perfectly positioned for another moonshot.

Though some investors may have been scared away, that's not so with Bitcoin’s long-term holders.

In fact, Bitcoin is about to hit what’s known in finance as a “bull cross” in which the current realized price of an asset exceeds the realized price for long-term holders.

Historically, when this happens it means a massive rally and an end to a bear market.

So hey, chin up. It’s all going to be alright, maybe even better than alright.

Just because Bitcoin dipped, don’t let your spirits dip too.

Meme of the Day

Kevin is here to fight the good fight.

Crypto 101

Realized Price: The realized price of an asset entails the difference in price between when you would sell the asset and when you bought it.

To calculate the realized price for crypto, you divide the total value of all coins at their respective purchase prices by the circulating supply of that particular cryptocurrency.

The Last Sip

When it comes to investing, we always advocate “buying the dip". Here are three dips the Coffee & Crypto team simply can’t resist.

• Lay’s French Onion Dip

• Buffalo Chicken Dip

• Kodiak Wintergreen Long Cut Tobacco

Stay Caffeinated,

Coffee & Crypto Team

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.