Former Alameda Research Head Reveals Instructions to Sell Bitcoin Above $20,000
In a surprising revelation, Caroline Ellison, the former head of Alameda Research, has disclosed that she received instructions from FTX’s CEO, Sam “SBF” Bankman-Fried, to sell Bitcoin if its price remained above $20,000. However, it is important to note that while this admission has shocked the crypto industry, there is a distinction between conspiring to suppress BTC price and actually carrying out such actions.
Timing of the Trades
The details regarding the size and timing of these trades are not available. However, it is likely that they took place between September and October 2022, just weeks before Alameda and FTX collapsed.
Assessing the Significance
It is difficult to determine whether Alameda effectively acted to suppress Bitcoin’s price below $20,000 as alleged by some analysts and traders. However, we can evaluate the significance of FTX’s Bitcoin holdings in comparison to other exchanges and the total trading volume.
Examining FTX’s Bitcoin Wallets
Publicly available information suggests that FTX had less than 47,000 Bitcoin in its reserves by September 2022. It is unlikely that Alameda Research held any liquid reserves due to the substantial debt of the trading company.
FTX Volumes and Holdings
FTX reported a spot Bitcoin volume of $30 billion as of July 2022. However, relying on these numbers is not advisable considering the exchange’s history of data manipulation. Assuming the mentioned sales occurred on FTX, a 4,000 BTC order would represent only 8% of the exchange’s average daily volume.
Comparison to Major Exchanges
According to Messari’s “real volume” methodology, the aggregate Bitcoin volume across major exchanges was below $3.5 billion per day between September and October 2022. Even if Alameda attempted to sell 25% of their BTC holdings in a single day, it would represent only 7% of the daily volume.
MicroStrategy’s Acquisition
In April 2022, MicroStrategy acquired 4,167 Bitcoins at an average price of $45,714. Despite this significant purchase, the price dropped on the same day as the announcement. This example illustrates that a single entity’s actions are unlikely to suppress the price for an extended period.
Comparing FTX to Binance and Coinbase
Binance held 623,000 Bitcoin in reserves in August 2022, while Coinbase had nearly 690,000 BTC. These two exchanges combined held almost 28 times more Bitcoin than FTX. This highlights the limited impact of SBF and Caroline’s venture in terms of effective firepower.
Hot Take: Limited Significance in Suppression
In conclusion, while there may have been a few days where Alameda exerted pressure successfully, causing their sales to suppress Bitcoin’s price below $20,000, considering their reserves and the price action of similarly sized orders, it is unlikely that their actions had a significant impact over a longer period.
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