The failed FTX saga continues when it comes to Bitcoin (BTC). FTX collapsed in early November 2022 following a report by CoinDesk that mentioned potential leverage and solvency concerns involving FTX-affiliated trading firm Alameda Research.
At the time, FTX’s collapse reverberated throughout the crypto marketplace, which lost billions dragging its market cap below $1 trillion.
Today, the company’s liquidation may again shake the foundations below the crypto market.
A court filing on Monday, September 11, 2023, showed that failed crypto exchange FTX owns $1.16 billion worth of Solana (SOL) tokens, or over one-third of the company’s total $3.4 billion liquid crypto portfolio.
The second largest stash of cryptos belongs to BTC, worth $560 million based on last August 31 BTC prices. Ether is third with $196 million worth at FTX.
The company also owns a separate stash of “Category B” crypto assets. These are lesser-known tokens, including some 10 billion Serum (SRM) tokens and 269 million Mango (MNGO) tokens.
Read: Bottoms up: Bitcoin not staying at current price range
The court document provides a detailed breakdown of the bankrupt crypto exchange’s assets including crypto, cash, government-recovered assets, and other investments. There were payments made to former boss Sam Bankman-Fried who is being tried as well as other executives.
The former CEO, his right-hand Gary Wang, and ex-Alameda CEO Caroline Ellison received $2.2 billion in cash, crypto, equity and real estate, alongside 46 others.
Executives including Wang, Ellison, Nishad Singh, and Ryan Salame have already pleaded guilty to various forms of fraud.
Since filing for bankruptcy in November, FTX has secured another $1.5 billion in cash on top of the $1.1 billion it held at the time of the collapse.
U.S. law may allow salvaging such payments and authorities can redistribute them to creditors, alongside what the FTX estate holds in liquid assets, and this could impact BTC prices and those of other cryptocurrencies.
BTC prices
Bitcoin’s price has been relatively steady, currently trading around $25,800 at time of publishing.
September has traditionally been a bear market for Bitcoin, with average losses in price values reaching 10%.
October has historically been a bullish one for BTC and consequently other cryptos.
Current conditions are described as being low in liquidity and trading volumes. This is despite a brief surge that saw BTC value briefly breach the $28,000 mark at the end of August.
Experts explain that the bearish episode arrives as uncertainty surrounds a postponed spot BTC ETF applications. This regulatory scrutiny of cryptos is intensifying and comes on the heels of legal actions taken against crypto exchange Binance.
And recently, a potential $3.4 billion liquidation of FTX’s recovered user assets has fueled more fears. BTC lost around 12 percent of its value last August, wiping out around $72 billion off its market cap in that period.
Positive news for Bitcoin
BTC recently experienced the largest daily gain in new addresses in approximately 5 years.
Over 700 thousand new BTC addresses were created on Saturday, September 9, 2023, the most since December 14, 2017. On that date, Bitcoin added over 800,000 fresh addresses in a day.
A possible explanation behind the surge in new BTC addresses is that new investors are possibly inclined to seize the opportunity the latest price dip presents. They can strategically accumulate BTCs in a bet on their long-term potential.
Bitcoin also has the potential to move with the stock market as institutional investors now represent the biggest portion of retail investors. And if the Dow Jones and S&P 500 react positively to inflation data due on Wednesday, September 13, 2023, it will be key for risk-sensitive assets like BTC. Cryptos tend to suffer from lack of demand when interest rates are high.
Bitcoin remains up about 55% in 2023. The currency’s live market cap is around $490 billion. Out of a maximum supply of 21 million BTC coins, some 19.5 million BTCs are currently in circulation.
The Grayscale Bitcoin Trust
The Grayscale Bitcoin Trust (GBTC), the largest institutional investment vehicle for Bitcoin, is now trading at a 17% discount compared to the BTC/USD price, according to recent data from CoinGlass.
This is a considerable improvement in the performance of GBTC when compared to previous months. When BlackRock, the world’s largest asset manager, announced its intention to file a bitcoin ETF, it buoyed Grayscale. The company itself is in a legal battle with U.S. regulators over converting GBTC into a spot ETF.
The U.S. Exchange Commission (SEC) had not approved any spot ETF applications yet.
