The Shocking Admission

On October 11, Caroline Ellison, the former head of Alameda Research, dropped a bombshell in a U.S. courtroom. She claimed that Sam Bankman-Fried, co-founder of FTX, directed her to sell Bitcoin if its price hovered above $20,000. This news sent ripples through the crypto ocean, making you wonder, what’s truth and what’s just tall tales?

Timing is Everything

First things first, let’s talk about timing. The alleged actions occurred between September and October 2022. This was mere weeks before both Alameda and FTX took a nosedive into the financial abyss. It’s tempting to believe they could have engineered a price drop. But hold your horses, folks – establishing whether they did it, or simply wanted to, is like trying to catch smoke with bare hands.

Counting the Bitcoin

As of September 2022, publicly accessible data revealed that FTX’s reserves included less than 47,000 BTC. Now, while one might assume that FTX was burning through its user Bitcoin faster than a kid through candy, it wasn’t the whole picture. They kept withdrawals rolling until that fateful day in November 2022. However, questions linger about the significance of their Bitcoin holdings in relation to the wider market.

Spot Trading Volume: A Mysterious Wrap

In July 2022, FTX bragged about a staggering spot Bitcoin trading volume of around $30 billion, averaging $1 billion daily. Yet, advice from experienced traders would suggest taking these figures with a grain of salt. Their penchant for misreporting data was like a magician performing sleight of hand. If we dive a little deeper, sales mentioned by Ellison could be as little as 8% of daily trading volume. It’s quite the David versus Goliath scenario when you compare that to total market activity.

Comparing Giants: Binance and Coinbase

For some context, consider this: Binance held 623,000 BTC, while Coinbase had nearly 690,000 BTC in August 2022. Together, they possessed approximately 28 times more Bitcoin than FTX. This reveals how minuscule Alameda’s numbers were in the grand scheme—like trying to suppress an ocean with a teacup.

The Final Verdict

In summary, while there may have been a fleeting moment when Alameda successfully pressed down Bitcoin prices, it’s unlikely to have any significant long-term effect when we consider their small reserves compared to others. So, as we reflect on what went down, remember: sometimes in the crypto wild west, stories can be more imaginative than real.