2nd November 2023 > > FTX & Bernstein.

tl;dr

Bankman-Fried is going to jail forever more, which isn’t quite long enough in my opinion. Bernstein makes a prediction that will be welcomed by the crypto community.

Market Snap

Market Wrap

As confidence grows that the trajectory of interest rates is down, not up, from here, BTC gets another boost. Central banks are always late to the party, and always overcompensate to make up for their tardiness. There is no better hedge against the hubris of central banks, and the mistaken confidence placed in central banks, than BTC.

Curious Cryptos’ Commentary – FTX

FTX’s downfall began precisely one year ago today when CoinDesk published a report that Alameda Research’s assets were dominated by FTT tokens, the native coin of FTX:

https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/

This raised questions about how closely intertwined these two supposedly separate companies were in practice.

Hindsight is wonderful of course, but given the Bankman-Fried owned both companies, had been CEO of Alameda, had appointed his girlfriend as his replacement, that both companies had a raft of the same executives, and that both operated out of the same office, perhaps some people who were investors, or had significant sums of cryptos in the care of these fraudsters and shysters, should have paid a bit more attention to the situation.

Four days later, Binance announced that it was selling its stash of FTT worth approximately half a yard. This started an old-fashioned bank run from those who were using FTX as a custodial option, and five days after that FTX filed for bankruptcy, dealing another body blow to the beleaguered crypto industry. BTC’s price dropped precipitously from over $20k to nearly $15k on this news. Looking back, we can now see that this was the final capitulation ending the crypto winter of 2022, but we did not know that at the time.

In one of those beautiful quirks of fate that shows the Universe – despite all evidence to the contrary – really is on our side, the anniversary of the start of FTX’s downfall marks the start of the jury’s deliberation on whether Bankman-Fried broke the law or not.

Surely that discussion will take all of five minutes, Bankman-Fried goes to jail for at least 110 years, and the rest of us can have a celebratory lunch.

Curious Cryptos’ Commentary – spot BTC ETF prediction

Bernstein have weighed in with their view of the impact of a spot BTC ETF.

Their house view is that a spot BTC ETF is as good as done, a view shared by the CCC research team, Bloomberg, BlackRock, and a bunch of other mighty TradFi firms, but not one shared by most of the market, given the current price of BTC.

Bernstein goes on to state they believe that 10% of BTC will go into spot BTC ETFs. Call that about 2mm coins currently valued at $70bn or so. That’s a mere 0.5% of the assets under management of the 12 asset managers currently vying to be the first to launch a spot BTC ETF, a launch that will be to the great relief of investors worldwide.

Our resident in-house technical analyst Larry believes just 0.1% is the closer number. I believe anywhere between 1% and 4%. You pays your money, you takes your choice.

With just over 4mm coins not in the grasp of diamond hands, Bernstein’s prediction of demand for 2mm coins might mean the price goes somewhat higher than their conclusion that BTC trades at $150k.