Analyzing the Alleged Bitcoin Price Manipulation by Alameda Research and FTX

Background on the Case

On October 11, Caroline Ellison, once the head honcho at Alameda Research, dropped a bombshell in a US court. She revealed that she had received orders from the infamous Sam Bankman-Fried, co-founder and CEO of FTX, to sell Bitcoin if it soared above $20,000. This statement sent shockwaves through the crypto world, as everyone tried to determine the difference between collusion and execution.

Unpacking the Claims

While Ellison’s claims are intriguing, they raise the question: Did Alameda actually lower Bitcoin’s price, or was it just a case of wishful thinking? Analyzing the timeline, we see that these potential trades likely happened between September and October 2022, right before the catastrophic collapse of Alameda and FTX.

Bitcoin Wallet Breakdown

When it comes to evidence, the only cold, hard fact we have relates to FTX’s Bitcoin wallets. By September 2022, they held less than 47,000 BTC, as per Glassnode data. It’s worth noting that while Alameda might have had additional Bitcoin stashed away elsewhere, their financial woes suggest they wouldn’t have had much left to sell.

Comparing Trading Volumes

Before jumping to conclusions about price suppression, let’s examine FTX’s trading volume. In July 2022, they flaunted a staggering volume of $30 billion for the month, which translates to about $1 billion a day. Yet, with FTX’s penchant for data manipulation, it’s hard to take these numbers at face value.

A Case Study with MicroStrategy

Consider this: if the sales mentioned by Ellison indeed occurred on FTX, a 4,000 BTC order, worth $80 million back then, made up a mere 8% of the daily average transactions on the platform. The supposed impact shrinks even further when juxtaposed against the bigger players in the market.

Wider Market Context

The concept of a single entity suppressing Bitcoin’s price is tough to swallow, especially considering how the ecosystem works. For instance, in April 2022, MicroStrategy bought 4,167 BTC at an average price of $45,714, which only led to a slight increase in market price. The trading environment is just too vast for one entity to wield that kind of power for long.

Benchmarks with Major Exchanges

To add perspective, back in August 2022, Binance held a whopping 623,000 BTC, while Coinbase reported nearly 690,000 BTC in reserves. Together, these exchanges had nearly 28 times more Bitcoin than FTX! That kind of disparity puts a dent in claims about SBF and Caroline’s ability to manipulate the market.

Conclusion: The Big Picture

In summary, while it’s possible that Alameda managed to create some pressure and briefly dip Bitcoin below the pivotal $20,000 mark, the lasting impact seems limited at best. The weight of their Bitcoin reserves relative to the overall market suggests that any attempts at price suppression were probably short-lived and overshadowed by larger market dynamics.