What Moved
Canadian CPI hit 7.7% for May in June's data release — another 40-year high and climbing. The inflation peak in Canada was approaching, with prices now nearly four times the Bank of Canada's 2% target, driven by energy (+48% YoY), food (+9%), and shelter costs. The June reading, released the following month, would reach 8.1% — the cycle peak (StatsCan, Jun 2022).
The Bank of Canada raised its overnight rate by 50 basis points to 1.50% on June 1, and the market was already pricing in a substantially larger hike for July. The tightening cycle was accelerating (BoC, Jun 1, 2022).
Celsius Network, a cryptocurrency lending platform, collapsed in June, freezing customer withdrawals before filing for bankruptcy. The Caisse de dépôt et placement du Québec (CDPQ) revealed a $154.7 million loss on its investment in Celsius — a stark reminder that institutional due diligence doesn't guarantee success in novel asset classes (CDPQ, Jun 2022).
Ninepoint Partners proposed restructuring its frozen private debt funds, offering unitholders a choice between a continuation vehicle and a liquidation vehicle. The proposal was the first concrete step toward resolving the February redemption freeze (Ninepoint, Jun 2022).
What It Means
June was a month that challenged assumptions across every alternative asset class.
The inflation trajectory — covered in detail in our event-driven analysis — confirmed that the BoC was behind the curve. Rates at 1.50% with inflation near 8% meant real interest rates were deeply negative. Much more tightening was needed, and the market was bracing for it.
The Celsius collapse and CDPQ's loss — covered in our event-driven analysis — highlighted the risks of institutional exposure to novel and unregulated asset classes. CDPQ, one of the world's most sophisticated institutional investors, lost its entire Celsius investment. The lesson: novel asset classes carry novel risks that traditional due diligence frameworks may not fully capture.
Importantly, the Celsius/crypto failure was distinct from the stresses in traditional private credit. MICs secured by real property, PE funds with operational control of portfolio companies, and infrastructure investments with contractual cash flows operated in fundamentally different risk categories than crypto lending platforms. The conflation of "alternatives" risked tarring the entire sector of Canadian alternative investments with crypto's problems — a conflation that careful investors needed to resist.
The Ninepoint restructuring proposal was a step toward resolution, though the outcomes for investors remained uncertain. The bifurcation approach — giving investors a choice between continuation and liquidation — became a template for resolving similar situations.
What We're Watching
The July BoC decision was the most anticipated in years. With inflation at 8.1% and the Bank clearly behind the curve, a jumbo hike was expected. Speculation ranged from 75bp to 100bp — either would be the largest single increase in decades.
Summer housing data would reveal whether the correction was accelerating under the weight of rising rates or finding a floor.
The Celsius bankruptcy proceedings and CDPQ's post-mortem would provide lessons for institutional alternatives allocation. The governance questions raised by the CDPQ loss were relevant beyond crypto: how institutional investors evaluate emerging strategies, what safeguards they require, and how they communicate with their own stakeholders when novel investments fail.
Whether the 8.1% reading would prove to be the cycle's true inflation peak was also a critical question. If inflation continued to accelerate despite the Bank's aggressive response, the rate trajectory would need to steepen further — with cascading implications for every rate-sensitive private market strategy.
Closing
June 2022 packed a full year of developments into 30 days. Record inflation, crypto collapse, institutional losses, and private credit restructuring — all against the backdrop of accelerating rate hikes. For Canadian alternative investors, the month demanded both perspective and vigilance: traditional alternatives remained fundamentally sound, but the environment was testing every portfolio.
For the full quarterly analysis, see Q2 2022: The Inflation Reckoning.
Alts Insider provides educational content for Canadian accredited investors. This is not investment advice. Always consult qualified professionals before making investment decisions.