Or is this just the beginning for FTX/Alameda Research. Are both the organizations stronger? This is As NewsBTC reported, Binance’s CZ smelled blood in the water and announced his exchange was selling their FTT reserves. This caused a bank-run which put FTX in a very dangerous situation. Are both of the Sam Bankman-Fried-led organizations’ destinies tied to the FTT token? Oder will it be OK if the token is lost?
This is the latest Bitcoin Magazine Pro report, they describe the current situation as, “a wave of panic taking shape that questions the solvency of both FTX and Alameda Research. As a result, we’ve seen nearly $1 billion in assets and token values fly out of known FTX and Alameda addresses over the last week.” Not only that, both FTT and BNB both falling. Alameda, FTX and FTX work overtime to ensure FTT remains at $22.
We’ll cover all of that and more, but first, let’s go to A second BM Pro reportIn which they explained the circumstances that lead to this. A document detailing Alameda Research’s reserves leaked and the whole world learned that the firm held approximately 90% of the total FTT token supply. This coin is issued by their sister company, FTX. And that’s problematic.
“It’s reported Alameda was holding $5.82 billion of FTT on June 30th, while the market cap of FTT at the time of the report was $4.2 billion. This is a result of some of their asset allocation being held in locked altcoins, which, similar to VC investments and employee stock compensation programs, has a locked/vesting period, only this time it’s using smart contracts. It should be noted that Alameda apparently applied a 50% haircut to all “locked” assets, but one could make the case that this is still generous accounting.”
There are some really fascinating caveats there.
Chart of FTT prices on FTX | Source: FTT/USD on TradingView.com
Binance and FTX are down
There seems to be a bank run. Wallets associated with FTX are moving funds like there’s no tomorrow. The exchange’s stablecoin balances “have been depleting at a rapid pace as customers move to get funds off the platform.” And that’s not their only worry, they also have to defend the $22 floor for FTT, but we’ll get to that. It is a zero sum game and someone must be winning even if FTX loses. Return to the Latest BM Pro report:
“It’s a stark difference to see $451 million in stablecoins flow out of FTX The $411 million flowed into Binance over the 7-day period. That tells anyone in the market that the exchange giant (Binance), which already has approximately 60% of the volume in the entire space across both spot and derivatives markets, is out for blood and stands to gain during this FTX situation.”
Although this may seem fun, it is not. The reality is that FTX will fall and the entire crypto market will crash. It would likely spread quickly and affect many projects and companies. “There’s a broader risk to the market here as we see Alameda unwind many other positions across tokens and bitcoin that will be used to raise additional capital,” BM Pro wrote, “we’re just in the beginning stages on what may play out here.
FTX stablecoin Balance 7d: -$451m
Balance 7d Binance stablecoin: +$411mper @nansen_ai pic.twitter.com/cwlg29hugz
— Alex Thorn (@intangiblecoins) November 7, 2022
The $22 Level
Why is team Sam Bankman-Fried so determined to defend FTT’s $22 level? Alameda Research’s CEO, Caroline Ellison offered CZ, “if you’re looking to minimize the market impact on your FTT sales, Alameda will happily buy it all from you today at $22!” There’s that number again. It’s why they are so passionate about it. According to BM Pro
“Alameda would likely not have such a vested interest in defending this level if it was not leveraged. Otherwise, they would let the market fall as much as it wants and simply acquire FTT at a lower price.”
Does this prove that FTX/Alameda leverage each other and that their fates are tied to FTT, or is it just a logical conclusion? But it’s unlikely. But it does suggest so. “The exchange rate differential between the FTT price on FTX vs. Binance has pushed to historic highs as Alameda and crew attempt to defend their token. Meanwhile, CZ and an army of speculators have begun to sell and go short FTT.”
It’s almost as if I’m looking at an emerging market central banking trying to protect its currency contre speculators. $FTT pic.twitter.com/hQc0Vh0ARe
— Dylan LeClair 🟠 (@DylanLeClair_) November 7, 2022
We might be witnessing “a classic speculative attack unfold,” says BM Pro. However, they feel it’s even deeper. “There is a much more important battle going on, and the FTT exchange rate is a matter of solvency for Alameda.” According to analyst Dylan LeClair, the whole situation “feels like I’m watching an emerging market central bank attempting to defend its currency against speculators.”
They can, but how?
charts by TradingView| Charts by TradingView