Ellison and SBF's Bitcoin Dance: Price Manipulation or Myth?
Unraveling the mystery of FTX and Alameda's alleged Bitcoin price manipulation.
In the twisted realm of cryptocurrency shenanigans, a sordid tale has unraveled. Caroline Ellison, the erstwhile maestro of Alameda Research, now finds herself under the harsh spotlight of a U.S. court, crooning a bizarre tune. She claims that the infamous Sam "SBF" Bankman-Fried, the conjurer behind FTX, whispered in her ear, urging her to dance a dangerous jig with Bitcoin. The catch? She was to sell this digital beast if it dared to breach the mythical realm of $20,000. A nefarious pact or a desperate gambit? Let's embark on this hallucinatory journey.
The question that looms like a desert mirage is whether Ellison and Bankman-Fried's sorcery indeed sent Bitcoin plummeting to the netherworld or if it's just a figment of the ether. In this circus of uncertainty, some ringmasters and snake oil salesmen insist that their dark arts succeeded, while other skeptics simply laugh it off, calling their efforts a sideshow act.
To unravel this enigma, we must unroll our sleeves and delve into the ledger of FTX's cryptic dominion and their alchemical dance with Bitcoin.
As the shadows on the wall morph into grotesque creatures, Glassnode data paints a grim portrait: by September 2022, FTX clutched a meager 47,000 BTC. But the plot thickens. Alameda Research, in its perilous debt-ridden state, likely didn't have liquid gold tucked away in hidden vaults. Thus, the question of whether they possessed the elixir to brew a Bitcoin storm remains unanswered.
A significant twist in this madcap tale is that FTX continued processing client withdrawals up to its last gasps on November 8, 2022. This means they couldn't have just tossed their Bitcoin hoard into the maw of the market without arousing suspicion and potentially hastening their demise.
So, assuming that Alameda did break out the crystal ball and sold a chunk of Bitcoin in September and October 2022, the real question arises - how seismic were their ripples in the crypto pond?
If, as the legend goes, these sales took place on FTX, a 4,000-BTC order, worth a cool $80 million back then, would have been but a blip on the radar, a mere 8% of the exchange's average daily hullabaloo. Moreover, when you step into the grand theater of total Bitcoin volume from the big players, Alameda's conjectured escapade appears like a blink in a wild desert dust storm.
According to Messari's so-called "real volume" routine, an exclusive nightclub that bans shady characters, the collective Bitcoin volume barely tiptoed above $3.5 billion per day between September and October 2022. Even if Alameda dared to flash-sell 25% of their 47,000 BTC treasure chest in a single day, that would have been nothing more than a 7% gust in the maelstrom across major exchanges.
Just to give you a taste of the absurdity of these numbers, let's take a detour to April 2022. MicroStrategy, with a flourish of their cape, announced they'd bagged 4,167 BTC, tossing $190 million into the cauldron. This, my friends, barely moved the needle as Bitcoin pirouetted from $44,580 to a sizzling $47,270. A 6% swing, for the uninitiated.
So, where does this carnival of numbers lead us?
The plot thickens, yet the shadow of doubt remains. FTX and Alameda were like gunfighters who brought butter knives to a bazooka fight. They didn't possess enough Bitcoin to single-handedly strangle its price. Yet, in the crypto-chamber of mysteries, it's conceivable their tinkering had the subtlety of a feather landing on the scale.
The crux of this maddening saga is simple: Do you believe that FTX and Alameda managed to manipulate the Bitcoin price, or was it all just a sideshow in the grand circus of digital gold? But in the end, facts are facts, and the picture they paint is more Jackson Pollock than Da Vinci.