Contagion
Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
It’s been a week since FTX’s implosion sent shockwaves through the market. And still, we’re only just beginning to understand the scale of Sam Bankman-Fried’s malfeasance.
Disclosures have rolled in at a searing pace since Monday. One of crypto’s largest lending firms, Genesis Global Capital, halted withdrawals on Wednesday as the investment bank scrambled to source liquidity to replace its exposure to FTX.
According to The Wall Street Journal, Genesis is now seeking a $1B line of credit – which is cause for concern given their entrenchment in the broader market.
Naturally, it’s been an arduous week for the markets. Following BTC’s decline to $15.5k, the market leader faced strong rejection at the previous range low of $17.6k. It’s curious to note that BTC’s price action has been relatively muted this week, despite the downpour of bearish news.
Could we be carving out a fresh range? Let’s hope the crab doesn’t last too long.
Fresh revelations
Following SBF’s exit from FTX, John Jay Ray III has been appointed as the fallen exchange’s new CEO. Ray previously led restructuring at Enron, and cites FTX’s business practices and failures as “unprecedented” – which says a lot.
The Chapter 11 bankruptcy filing also sheds light on some previously unknown fraudulent activities. It appears that customer funds were channelled directly to Alameda from FTX, and that Alameda was exempt from liquidations on FTX, despite being touted as separate entities.
Forward Focus
It’s likely that contagion is only just beginning to spread as we gain more insights into the earth-shattering events unfolding.
Just yesterday, Binance, OKX, and Bybit suspended deposits of USDC and USDT from Solana.
In times of unprecedented uncertainty, caution is key.
We’re staring down the barrel of an onslaught of regulations and a fresh battle against incoming CBDCs.
However, with sentiment at an all time low and both the US and EU observing lower than expected inflation figures, it’s also worth considering that this could mark a bottom for the time being.
As always, enter with confidence, stay true to your strategies, and take profits aggressively.
May Satoshi be with you.
