If Alameda/FTX were to fail.... would be a massive crypto assets liquidation event bigger than Terra/Luna to 3AC to Celsius to Voyager contagion
Gotta buy a ticket to see and experience the show... I went short $FTT perp futures at $22.44 Will add if it goes my way, will cut losses around $27sh
Binance is dumping its FTT: https://www.ft.com/content/1d1fbd51-7089-4392-8ef3-ca30357116ac As a result, FTX withdrawals have increased: https://www.bloomberg.com/news/arti...withdrawals-as-binance-plans-to-sell-ftt-coin Related: https://coingeek.com/tether-mints-ftx-liquidates-alameda-pads-balance-sheet/ "Under any sensible regulatory scheme, no financial institution—let alone one that allegedly reaped $1 billion in profit last year—would be permitted the type of tangled coziness that FTX and Alameda enjoy. Protestations of ‘arms-length’ operations aside, the incestuous relationship between these two entities encourages speculation as to what information Alameda may be privy to regarding how other customers are trading on FTX." "That FTX/Alameda might be a financial Potemkin village may help explain why SBF backed off the “dumb quote” he made this spring that suggested he could spend up to $1 billion in U.S. political contributions through the 2024 presidential election. It could also explain why most of FTX’s much-publicized acquisitions and bailouts of failed crypto companies are later revealed to involve only a tiny portion of actual cash. It could also explain why SBF is constantly seeking to raise additional money from venture capitalists despite all those billions in profits FTX is supposed to be generating. Finally, it might explain why FTX is the place where derivatives traders go to get rekt."
Interesting stuff. I was thinking about the cost of capital in general this morning and I do wonder how these Fed rate hikes actually effect the system. It would seem like it has to be that raising from 0 to .75 is not the same at all as raising from 3.25 to 4. I would think this last rate hike and the next two hikes are absolutely massive as far as the effect on the system. Who really cares if you are earning 0 or .75. 75 bps on 3.25% though has some meat to it. 3% to 5% is so different than 0 to 2%. It would seem like it should act as a massive stress test on the crypto infrastructure and some firms won't pass. I imagine in retrospect it will be obvious that you won't have the same crypto ecosystem with 4-5% risk free rates when the entire ecosystem was born and evolved to risk free rates under 3% and most of the time at zero.
This comment applies not just to crypto, but the financial system and financial markets in general. Many are saying we're just 3-6 months from the end of this bear, but it might still be in the first inning. And crypto is for all intents and purposes an ultra-speculative stock.
CZ may have accepted the OTC offer for the $FTT tokens. Will close the perp futures short position --------- Edit: will close when I see more evidence that CZ has accepted the OTC buy offer. Still some selling pressure on $FTT
u/HarmonicUnion "It annoys me so much how badly cryptobros misunderstand fractional reserves. Fractional reserves don't mean "the bank doesn't actually have the money to back everyone's accounts". It means "Most of the bank's assets are not in liquid form". The reason bank runs are bad is because they force a bank to suddenly liquidate all of its assets, dumping the prices and forcing the bank into insolvency when it genuinely wasn't insolvent before. What's going on with FTX is much worse. They inflated their balance sheet by pumping the price of their own token up, and holding billions of it as assets. They are actually insolvent, but are exploiting an accounting loophole to not be insolvent on paper. So while a bank run hurts the bank by forcing it to sell its assets for bad prices, if FTX were forced to sell its assets from a run, it wouldn't just go for bad prices, it would fucking collapse. They won't allow this though. They will stop withdrawals before mass selling their FTT. If people catch on, the market will mass sell FTT for them, and FTX will eventually declare bankruptcy if the price does not recover."