On Oct. 11, Caroline Ellison, the previous head of the now-defunct Alameda Analysis, knowledgeable a U.S. courtroom that she acquired directions from FTX’s co-founder and CEO, Sam “SBF” Bankman-Fried, to promote Bitcoin (BTC) if its worth remained above $20,000.
This admission got here as a shock to the complete crypto trade, however the two conspiring to suppress BTC worth, versus really doing it are two various things.
Whereas there aren’t any particulars accessible relating to the scale and timing of those trades, the timeframe seemingly falls inside September and October 2022, simply weeks earlier than Alameda and FTX collapsed.
Figuring out whether or not Alameda successfully acted to suppress Bitcoin’s worth under $20,000, as alleged by some analysts and merchants is difficult, if not not possible. Nonetheless, it’s doable to evaluate the importance of FTX’s Bitcoin holdings compared to different exchanges and the overall buying and selling quantity.
Take a look at the Bitcoin wallets
At the moment, the one dependable publicly accessible data pertains to the BTC wallets that beforehand constituted the alternate’s reserves, amounting to lower than 47,000 Bitcoin by September 2022, in line with Glassnode information. It is doable that Alameda Analysis held different addresses straight, however given the substantial debt of the buying and selling firm, it is unlikely they’d any liquid reserves.
One shouldn’t assume that FTX used its whole stack of Bitcoin from customers for the reason that alternate continued processing consumer withdrawals till its ultimate day on Nov. 8, 2022. Transferring these belongings abruptly would have aroused suspicion, doubtlessly accelerating their insolvency. Nonetheless, it is worthwhile to analyze the importance of FTX volumes and holdings.
As of July 2022, FTX reported a spot Bitcoin quantity of $30 billion, equal to $1 billion per day on common. Nevertheless, counting on these numbers is just not advisable, given the alternate’s historical past of knowledge manipulation, as demonstrated by their falsified insurance coverage fund calculation methodology.
Assuming the gross sales talked about by Ellison occurred on FTX, a 4,000 BTC order, valued at $80 million on the time, would characterize solely 8% of the alternate’s common day by day quantity. Moreover, when contemplating the overall Bitcoin quantity from main exchanges, Alameda’s speculated order dimension turns into much more inconsequential.
In line with Messari’s “actual quantity” methodology, which excludes wash buying and selling, the mixture Bitcoin quantity was under $3.5 billion per day between September and October 2022. Even when Alameda tried to promote 25% of their 47,000 BTC holdings in a single day, that $240 million would characterize solely 7% of the day by day quantity throughout main exchanges.
For comparability, in April 2022, MicroStrategy introduced the acquisition of 4,167 Bitcoins at a mean worth of $45,714, totaling $190 million. This seemingly occurred in late March, with Bitcoin’s worth growing by 6%, from $44,580 to $47,270.
Two notable facets of the worth motion throughout MicroStrategy’s acquisition stand out. First, the worth dropped under $46,000 on the identical day because the official announcement on April 5, 2022. Extra importantly, the $48,000 peak seems to correspond to the degrees the place MicroStrategy accomplished its execution, ensuing within the $45,714 common worth.
Nevertheless, when inspecting the broader image, Bitcoin was buying and selling round $39,500 within the two weeks main as much as MicroStrategy’s exercise and decreased to $39,500 a number of weeks later. There isn’t any cause to imagine {that a} single entity may successfully suppress the worth for longer than every week, whether or not it is Tesla unloading $936 million price of Bitcoin or Alameda liquidating FTX shoppers’ deposits.
To offer some context, Binance held 623,000 Bitcoin in reserves in August 2022, whereas Coinbase had almost 690,000 BTC. These two exchanges mixed held nearly 28 instances extra Bitcoin than FTX. This reality underscores the restricted influence of SBF and Caroline’s enterprise when it comes to efficient firepower.
In essence, there might have been a number of days the place Alameda exerted stress efficiently, inflicting their gross sales to suppress Bitcoin’s worth under $20,000. Nevertheless, contemplating their reserves and the worth motion of equally sized orders, the occasion was unlikely important when analyzing a interval longer than a month.
This text is for common data functions and isn’t meant to be and shouldn’t be taken as authorized or funding recommendation. The views, ideas, and opinions expressed listed below are the writer’s alone and don’t essentially replicate or characterize the views and opinions of Cointelegraph.
