Bitcoin

Bitcoin and the bankruptcy of FTX

Published

8 months ago

10 June, 2024

NEW YORK, NEW YORK – AUGUST 11: Former FTX CEO Sam Bankman-Fried arrives for a bail hearing in… [+] Manhattan Federal Court on August 11, 2023 in New York City. (Photo by Michael M. Santiago/Getty Images)

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Let me share the background story and mechanics of Bitcoin and FTX.

Short selling Bitcoin is not possible in the US due to securities regulations. This is one aspect of securities law that has left me somewhat perplexed. Overall, shorting Bitcoin is the worst financial decision for any investor, given that Bitcoin is the best performing asset of the last decade. At the same time, individuals must have the ability to express any opinion they wish in the financial markets. Therefore, the current ban on selling Bitcoin in the US is a mistake.

It is permitted to sell stocks in the US as accredited investors can do so through their brokerage accounts. As Bitcoin matures as an asset class, regulation will change and eventually Fidelity will allow long and short positions. But we’re not there yet. Outside the US, it is possible to sell Bitcoin short. This explains why exchanges like FTX were domiciled in the Bahamas. The exchange handles all the details of handling short positions on the back end, similar to how stock exchanges today handle stock lending, where short sellers borrow shares and buy them back later.

Bankruptcy and asset freeze

When FTX collapsed, all of its depositors lost access to their funds. My opinion is that FTX depositors got what they paid for. They did not exercise the necessary due diligence before holding their funds on a cryptocurrency exchange. Moving your Bitcoins to cold storage would have avoided all the problems with freezing FTX assets. So the big takeaway here is that Bitcoin fixes this natively. By its very design, Bitcoin has built-in encryption and security that ensures the safety of funds. This is the main point.

The recovery

When FTX filed for bankruptcy, all assets were dollarized. This means that the bankruptcy estate converted the value of all deposits to their dollar value at the time of the petition. Therefore, if John Doe had a bitcoin valued at $20,000 at the time of bankruptcy, the estate would file its claim as $20,000 rather than 1 BTC. This is the amount that the estate will seek to recover for John Doe, knowing that the assets it uses for this recovery are still bitcoin. Two things happened since the bankruptcy filing that caused the value of the bankruptcy estate to increase.

First, Sam Bankman-Fried (SBF) has invested in a number of ventures outside of cryptocurrency. In fact, that was the problem: he took deposits from customers and made all kinds of investments without their consent. Most of these investments were worthless, but he invested $500 million in Anthropic, a generative AI startup. This is a huge investment for a startup and it has paid off as this startup is now worth several times the initial investment. In this strange turn of events, generative AI saved FTX from collapse.

Second, the value of bitcoin (and many other cryptocurrencies) has increased since the time of the bankruptcy filing. Depending on when you purchased, bitcoin increased 2 to 3 times from the date of bankruptcy. And so the property is now worth more and is therefore able to recoup its original depositors.

There’s an interesting wrinkle here. Ownership subsidizes returns between different cryptocurrencies. Since you pay in dollars, your obligation is only to the dollar value of the initial shares. So in John Doe’s example, the estate owes him $20,000, not one Bitcoin. If that Bitcoin doubles to $40,000, then the equity can use the excess profits to cover the losses of other depositors who invested in the worst-performing cryptocurrencies. This peculiarity of the bankruptcy code allows strong currencies to subsidize weaker ones.

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Related Topics:Bitcoin FTX FTX Bankruptcy Recovery Sam Bankman Fried

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Bitcoin

What to watch for in the markets

Published

6 months ago

21 July, 2024

SatoshiTimes Staff

Photo: Andrew Harnik (Getty Images)

After witnessing one of the largest global IT outages on record, affecting the travel, finance and healthcare sectors worldwideThis week is set to see more political drama, events, and earnings reports from tech giants.

Donald Trump’s ‘Lovefest’ Sets Jamie Dimon Up for Consideration for Treasury Secretary Job

Let’s take a look at what awaits us:

Major companies will release their earnings reports

Major tech companies and others will release their earnings reports this week, paving the way for what the second half of 2024 will look like.

Monday

Verizon will report earnings before the start of operations.

Tuesday

Coca-Cola, Comcast and UPS are all set to report earnings before the market opens.
Tesla will report earnings in the morning, while General Motors will report earnings in the evening.
Alphabet and Visa will report results after the market closes.

Wednesday

AT&T will release its report before the market opens.
Ford and Chipotle will report earnings after the market closes.

Thursday

Earnings reports from AstraZeneca, American Airlines and Southwest Airlines will be released before the market opens.

Trump to speak at Bitcoin conference

Presumptive Republican presidential nominee Donald Trump will speak at the next Bitcoin Conference in Nashville, Tennesseewhich is scheduled for July 25-27. While this is the first time a presidential candidate will attend the conference, it has sparked a debate over whether the crypto-friendly Trump will receive support from the crypto community in the upcoming election.

In addition to Trump, independent presidential candidate Robert F. Kennedy Jr. will also discuss crypto during the conference. Crypto advocates such as ARK Investment’s Cathie Wood, MicroStrategy’s Michael Saylor, and whistleblower Edward Snowden are among some prominent names who will be participating in the conference.

Ether ETFs are on the way

New Ether Spot ETFs are set to begin trading on Tuesday, July 23. Much like the spot Bitcoin ETFs, these ETFs will allow investors to buy the second most popular cryptocurrency like stocks. BlackRock, Ark Invest/21Shares, VanEck, Grayscale, Fidelity, Bitwise, Franklin Templeton, and Invesco/Galaxy Digital are all set to offer Ether ETFs. Crypto asset manager Bitwise predict that trading in the Ether ETF will drive the price of Ether higher, potentially surpassing $5,000.

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Bitcoin

Cryptocurrency’s Biggest Winners and Losers in a Second Trump Presidency

Published

6 months ago

21 July, 2024

SatoshiTimes Staff

Cryptocurrency’s Biggest Winners and Losers in a Second Trump Presidency

Bitcoin miners and cryptocurrency companies that have been blocked from going public in the U.S. could ultimately be the biggest winners in the digital asset world under a second Donald Trump presidency. Foreign companies at risk of losing market share could end up being the biggest losers.

That’s the view that’s taking hold among market participants and observers in the wake of the former president’s growing embrace of cryptocurrency as his chances of election grow. survey released Thursday by CBS News showed Trump with the majority — 52 percent — of likely voters in his likely November rematch with President Joe Biden.

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Bitcoin

Bitcoin, Ethereum, Solana and Cryptocurrency Markets Look Ready to ‘Send’ as Stars Align, According to Investor Chris Burniske

Published

6 months ago

21 July, 2024

SatoshiTimes Staff

Bitcoin, Ethereum, Solana and Cryptocurrency Markets Look Ready to ‘Send’ as Stars Align, According to Investor Chris Burniske

Cryptocurrency investor Chris Burniske says Bitcoin (BTC), Ethereum (ETH), Solana (SUN) and the cryptocurrency market in general seem poised for a run.

Former Head of Cryptocurrency at ARK Invest account his 292,200 followers on social media platform X that several catalysts are aligning, suggesting that digital asset markets are on the verge of a bull run.

According to Burniske, a partner at venture capital firm Placeholder, the highly anticipated launch of Ethereum-based exchange-traded funds (ETFs), Republican presidential candidate Donald Trump speaking at an upcoming Bitcoin event, and the current state of the BTC, ETH, and SOL charts all suggest significant optimism for the cryptocurrency markets.

“With ETH ETFs set to go live, Trump speaking at The Bitcoin Conference, and BTC, ETH, and SOL charts looking [they do] (while stocks are weak), it’s hard to imagine a world where we don’t ship next week.”

Reuters recently reported that preliminary approval for ETH ETFs has been granted as the Bitcoin Conference is scheduled to take place from July 25-27.

BTC, ETH, and SOL are trading at $67,333, $3,528, and $174 at the time of writing, respectively.

The venture capitalist too provides an update on his prediction that the total crypto market cap will eventually hit $10 trillion. According to his chart, the path to $10 trillion is currently “23%” complete, as it sits around $2.2 trillion.

Source: Chris BurniskeX

Earlier this month, Burniske he said in an interview with Real Vision CEO Raoul Paul that he has his eye on the Move ecosystem, which was originally built by social media giant Meta and then used to develop layer 1 blockchains Sui (IUE) and Apts (APT).

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Bitcoin

Here’s the next target for BTC before bulls can hold out for $70K

Published

6 months ago

21 July, 2024

SatoshiTimes Staff

Here’s the next target for BTC before bulls can hold out for $70K

Bitcoin’s recovery is going well, and the market is seemingly poised to create a new all-time high in the near term.

Technical analysis

Per NegotiationRage

The daily chart

As the daily chart shows, the price of Bitcoin has been rising since it broke above the 200-day moving average.

The market has also reclaimed the $60K and $65K levels and is moving towards the $68K resistance zone, which could be the last hurdle before creating a new all-time high. With the RSI also indicating that the price has clear bullish momentum, it could be just a matter of time.

Source: TradingView

The 4-hour chart

Looking at the 4-hour chart, it is evident that the price has been rising rapidly since breaking the downtrend line to the upside. The market also broke the $65K resistance level with momentum, turning it into a support.

While almost everything points to a new record high in the coming weeks, there is one worrying sign. The RSI is showing a clear bearish divergence between recent price highs, which could indicate a correction or even a reversal in the near term.

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