Bear Stearns Redux? Goldman Sachs Wants To Bail Out Celsius Network

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There are voices in the business media who claim that the stock market (and crypto market) rout of 2022 has all the warning signs of 2008. If that were true, the real crash is still off by a few months and would only start in September or October. On the other hand, the latest signs from the crypto market are indeed strikingly similar.

Those of you old enough to remember will see what I mean. Back in March of 2008, Bear Stearns, the 85-year-old investment bank, narrowly avoided bankruptcy by being sold to JP Morgan Chase at the shockingly low price of $2 per share (a 93 percent discount from Bear’s closing stock price). The markets thought that the rut would be over and continued slowly grinding up again. In the first weeks of September 2008, Bank of America purchased the struggling Merrill Lynch. Two weeks later though, when Lehman Brothers went bankrupt, the markets did catch on and crashed.

Sixteen years later and a crypto lending platform known as Celsius Network (which got caught in a WallStreetBets style short squeeze this week) is about to go bankrupt as well. It comes after Terraform Labs saw its Terra Luna stablecoin crash and Bitcoin lost about 70% since it’s top in November of last year.

$12 billion becomes $2 billion

Crypto lender Celsius, which still had some $12 billion under management as late as May of this year, caused the latest Bitcoin crash when it announced on June 12 a temporary halt to withdrawals from its platform, saying “extreme market conditions” were the cause.

But now there may be hope on the horizon, as global business bank Goldman Sachs announced it was ready to purchase the remaining assets of Celsius. Goldman seeks $2 billion from investors to buy up distressed assets.

Offering $2 billion for something worth about $12 billion about a month ago sounds a lot like Bear Stearns back in 2008 to me. If in a few months from now Peter Brandt is proven right and Coinbase indeed goes under, beware for both crypto and tech markets.