On October 11, Caroline Ellison, formerly at Alameda Research, dropped a bombshell in a United States court. She revealed that she had received instructions from FTX co-founder and CEO Sam “SBF” Bankman-Fried to sell Bitcoin (BTC) if its price remained above $20,000. This revelation sent shockwaves through the crypto industry, but the true extent of their efforts to suppress BTC’s price remains a topic of debate.
While the specifics of the trades, including their size and timing, are not available, they likely occurred between September and October 2022, shortly before the collapse of Alameda and FTX. Assessing whether Alameda effectively suppressed Bitcoin’s price below $20,000 is a challenge, if not an impossibility. However, we can gauge the significance of FTX’s Bitcoin holdings in comparison to other exchanges and the total trading volume.
Examining FTX’s Bitcoin Wallets As of September 2022, publicly available data indicates that FTX’s BTC reserves amounted to less than 47,000 BTC. Although it’s possible that Alameda Research held other addresses directly, the trading company’s substantial debt makes it unlikely that they had liquid reserves.
It’s important to note that FTX continued processing client withdrawals until its final day on November 8, 2022. Abruptly moving these assets would have raised suspicions and potentially accelerated their insolvency. Nonetheless, investigating the significance of FTX’s volumes and holdings is worthwhile.
Comparing Volumes: Coinbase vs. FTX In July 2022, FTX reported a spot Bitcoin volume of $30 billion, averaging $1 billion per day. However, relying on these figures is risky due to the exchange’s history of data manipulation, notably in their insurance fund calculations.
If Ellison’s sales occurred on FTX, a 4,000-BTC order, valued at $80 million at the time, would represent just 8% of the exchange’s average daily volume. When considering the total Bitcoin volume from major exchanges, Alameda’s speculated order size appears even more inconsequential.
Using Messari’s “real volume” methodology, the aggregate Bitcoin volume was below $3.5 billion per day between September and October 2022. Even if Alameda attempted to sell 25% of their 47,000 BTC holdings in a single day, that $240 million would represent only 7% of the daily volume across major exchanges.
For context, in April 2022, MicroStrategy acquired 4,167 BTC at an average price of $45,714, totaling $190 million. The price dropped below $46,000 on the day of the announcement and reached a peak of $48,000. Still, it’s essential to remember that a single entity’s ability to suppress prices for an extended period is doubtful.
Comparing Reserves: Binance and Coinbase In August 2022, Binance held 623,000 BTC in reserves, while Coinbase had nearly 690,000 BTC, dwarfing FTX’s holdings. This underlines the limited impact of SBF and Caroline’s efforts in terms of effective firepower.
In essence, there may have been a few days where Alameda influenced Bitcoin’s price, causing their sales to push it below $20,000. However, considering their reserves and the price action of similar-sized orders, this event was unlikely to have a significant impact over a more extended period.
The claim of suppressing Bitcoin’s price is a complex matter, and the true extent of its success remains shrouded in uncertainty.
