Madman said
The FTX run had no impact on the U.S. stock market, which opened high and closed higher throughout the day. However, for the cryptocurrency circle, it was like a catastrophic panic. The integer mark of $20,000 was directly broken as if it was made of paper, causing widespread panic trading. However, I still want to remind everyone to be rational at the beginning. Even if there is a greater panic, the selling pressure from Bitcoin and Ethereum is limited. Do not adjust the callback expectations too low. Moreover, FTX is currently operating normally, and there is no obvious tendency of a sudden collapse. Once the risk is lifted, the market will not only go back to where it came from, but also rise back to what should rise. When everyone starts to panic, it means that a turning point has appeared.
Let me first tell you the story of FTX. In the past 24 hours, large transfers on the chain have surged, and almost most of them are related to FTX and Alameda. SBF raised funds from all directions, but what is interesting is that we did not see too much funds from the exchange's cold wallets, but from protocols such as Compound, MIM, Gearbox, and split transfers from Alameda. It is not difficult to see that FTX did divert user funds to various revenue pools, and the splits were very scattered. It is not difficult to guess that FTX's operation will definitely deposit part of the funds into US Treasury bonds. After all, this is one of the most stable and higher ways to earn returns, but liquidity problems will be highlighted during a run. SBF himself said that FTX has enough assets to cover user deposits, and FTX is one of the companies with the highest per capita income of employees in the world. The current deposit and withdrawal queues are decreasing and returning to a reasonable level, and nodes and banks are catching up. The madman also believes that SBF has sufficient funds in reserve, but historically, runs on financial institutions are always caused by liquidity issues. In theory, this amount of money is nothing on Wall Street, and there are always bigwigs willing to take this opportunity to gain profits, so the probability of FTX collapsing in the end is not high, and at most it will only cause temporary panic.
Overall, FTX continued to have a net outflow of US$653 million in the past 24 hours, and the withdrawal tide is still ongoing. Among them, a giant whale withdrew US$284 million in cryptocurrencies and is still withdrawing coins. It started to withdraw coins at US$500,000 per transaction in the morning, and now it is withdrawing coins at US$1,000 per transaction. It is estimated that the exchange has limited the upper limit of a single transaction. It is enough to see that there are indeed certain problems with FTX's liquidity at present, which is also the biggest reason for the market panic and sell-off, so that the demand for BTC and ETH put options has re-emerged, mostly for hedging strategies made by large funds to prevent black swan events.
Xu, a celebrity who disappeared for a long time, also spoke again, saying that the collapse of FTX would not benefit the entire industry, and hoped that CZ and SBF would reach a new agreement. At the same time, he believed that if the market value of BNB exceeded BTC, the crypto industry would fail completely and CZ would lose everything. What Xu said made sense, and CZ was not stupid. When he saw that FTX’s funds were fine, he would definitely come out to make peace and give himself a way out. At that time, the market would return to a big rise, and it is expected to not take too long.
The US central bank reported that cryptocurrency is no longer one of the top ten most frequently cited potential risks, replaced by political tensions, COVID-19, etc. This means that the risk release has been recognized by the market at this point, and the bottom is forming.
The Russian Central Bank is integrating crypto assets into the local financial system. The report focuses on crypto taxation and the regulation of crypto asset issuance, and also intends to open the domestic market to foreign issuers. This is a comprehensive embrace of crypto assets. After all, due to US sanctions, cross-border finance is severely restricted. Using crypto assets as an alternative is obviously the most convenient way at present, and it can be regarded as a rigid demand of Russia.
The U.S. Department of Justice seized $3.36 billion worth of Bitcoin related to the Silk Road (dark web), making it the largest cryptocurrency seizure in history. There is no word on how it will be disposed of, but based on past experience, it is highly unlikely that it will be dumped directly into the market.
Panic 31, not much has changed.
Bitcoin: The biggest panic of this wave has been released. As long as FTX can repay smoothly and no black swan events occur, this wave of decline should be over. The shock pattern at the daily level has not changed, so a sharp drop is a buying opportunity. If you sold yesterday based on the risk warning, you can consider buying it back today.
ETH: Weak linkage, also pulled back to the strong support level, is expected to rebound in linkage.
SOL: Due to the run on FTX, SBF was expected to sell SOL to redeem assets, so it was smashed by the market. Its recovery may be slower than other mainstream coins in the market, but as long as the storm is over, it will rise back to where it fell. The previous market rumors that the additional issuance was an inflation reward mechanism were within the normal range. It was mistakenly killed during the day, and the panic decline came to an end.
FTT: It is the main battlefield of short-selling forces and the biggest victim of the FTX run. Whether from the perspective of the exchange collapse or the expected sell-off of the assets themselves, it is the leader of the decline. Currently, the chips are highly concentrated and there are not many chips left to be smashed outside. SBF cannot be sold at a good price due to market liquidity issues, so it is likely to have fallen to the right level. However, for most investors, it is recommended not to take the knife. After all, FTX still has too many uncertainties.
Overall, the probability of FTX landing smoothly in the end is much higher than that of a sudden collapse, and a black swan event is unlikely to occur. Based on this judgment, CZ will also come to "shake hands and make peace", and the market will return to an upward trend. The current time when people are panicking may be the best opportunity to increase positions. There are fewer and fewer opportunities below 20,000, so try to seize them as much as possible.
