The “bitcoin is dead” clique is back and doing it again. The collapse of the FTX cryptocurrency exchange has resurrected those infamous miners who once again blame the stolen money on a thief, not the thief.
“We need regulation! Why did the government allow this to happen? they shout.
For example, Chetan Bhagat, a famous Indian author, wrote a detailed crypto commentary, comparing the cryptocurrency industry to communism that promised decentralization but ended in authoritarianism.
Predictably, he used a melted bitcoin (BTC) logo to illustrate his article.
Hello everyone,
“Crypto is now dead: FTX, a cryptocurrency exchange, collapsed last week, proving many people very wrong,” my column in TOI today.Keep reading and sharing! pic.twitter.com/A4ClVdHOt2
— Chetan Bhagat (@chetan_bhagat) November 15, 2022
Hey Everyone, “Crypto Is Dead Now: FTX, Cryptocurrency Exchange, Declined Last Week, Proving Too Many Cool Guys Wrong,” my column in today’s TOI. Read and share! pic.twitter.com/A4ClVdHOt2 — Chetan Bhagat (@chetan_bhagat) November 15, 2022
Chetan Bhagat should have chosen a more accurate picture for his op-ed (who melted FTX Token (FTT)?), especially after looking at the history of bitcoin, which survived a nationwide ban for more than ten years. This includes 466 stillbirths since it started in 2009, when it traded for pennies.
The FTX/Alameda drop is similar to previous bearish trigger events like Mt. Gox in 2014. Therefore, this failure of centralization will once again emphasize what makes bitcoin special, and why FTX is an alternative to bitcoin and decentralization.
In addition, the event is expected to encourage the growth and development of decentralized bitcoin exchanges, which will help reduce reliance on trust.
FTX may not have any bitcoins on deposit
Traders responded to FTX’s devastating drop by withdrawing their BTC from custodial exchanges. In fact, the total amount of bitcoins held by all exchanges fell to 2.07 million BTC on November 17, from 2.29 million BTC at the beginning of the month.
US-based exchanges, in particular, saw the largest outflows, with users withdrawing over $1.5 billion in BTC in the past week alone.
On November 9, FTX stopped withdrawals of all cryptocurrencies, including bitcoin, raising suspicions that the exchange did not have enough reserves to meet demand.
This was also reflected in a leaked balance sheet from FTX that showed the exchange had zero bitcoin against its $1.4 billion in BTC liabilities. In other words, FTX enabled the exchange of fractional reserve bitcoins.
“On the one hand, it’s bad for you because you’ll only find out that they floated naked when the exchange comes into effect, and you’ll lose all your funds,” writing Jan Wüstenfeld, independent market analyst. He adds:
“On the other hand, it artificially increases the supply of bitcoins in the short term, inhibiting the price and preventing front. […] Yes, I know it’s not real bitcoins, but as long as exchanges issue fake paper, bitcoin remains functional, the effect is there. »
Therefore, FTX’s low exposure to bitcoin may increase the likelihood of selling remaining funds to increase liquidity.
It is also likely that a new cohort of bitcoin keepers will join the fray by forcing people to keep their funds on risky and self-hosted exchanges. The decrease in the number of bitcoins on exchanges means that there is less BTC to sell.
Sam Bankman-Fried was anti-Bitcoin
FTX founder Sam Bankman-Fried (SBF) was the second-biggest Democratic donor after George Soros for the midterm elections, donating nearly $45 million to push for cryptocurrency regulations that would allegedly benefit his business.
Also Read: US Cryptocurrency Exchanges Lead Bitcoin Exodus: Over $1.5 Billion in BTC Withdrawn in One Week
But there is high speculation that SBF has tried to reduce the growth of bitcoin through US lawyers, as well as news articles, where it has reduced the value of bitcoin as an effective payment system.
MSM lionized this shady character. For example, here are 2 of the 219 articles about him @FT. @SBF_FTX‘s anti-Bitcoin, pro-centralization and pro-hand regulation values are definitely aligned with their own.
Was he the poster boy for an orchestrated propaganda campaign? https://t.co/urJcu6mqB6 pic.twitter.com/PTIn1JudXG
— Bitcoms (@bitcoms) November 15, 2022
MSM praised this sleazy character. For example, here are 2 of the 219 articles about it on @FT. @SBF_FTX’s anti-bitcoin, pro-centralization and pro-heavy control values definitely aligned with theirs. Was he a pioneer of an orchestrated propaganda campaign? https://t.co/urJcu6mqB6 pic.twitter.com/PTIn1JudXG- Bitcoms (@bitcoms) November 15, 2022
Other commentators have also drawn attention to a connection between the SBF and the anti-crypto US Senator Elizabeth Warren, noting that the father of the ex-crypto, Joseph Bankman, helped the politician draft tax legislation in 2016.
This is crazy:
Elizabeth Warren is known as an anti-crypto Senator
Who helped her draft her tax legislation in 2016?
None other than Joseph (Joe) Bankman, father of SBFhttps://t.co/QMYkC2gpE9
— Ryan Shea (@ryaneshea) November 15, 2022
It’s crazy: Elizabeth Warren is known to be the anti-crypto senator. Who helped her draft her tax legislation in 2016? None other than Joseph (Joe) Bankman, the father of SBFhttps://t.co/QMYkC2gpE9. — Ryan Shea (@ryaneshea) November 15, 2022
SBF’s influence with US lawmakers has now faded as it faces potential criminal charges for illegally using client funds for FTX transactions.
Press F to exit the market
In the past, the collapse of the cryptocurrency market was explained by the failure of centralized players and “altcoins”, which were ultimately just a way to make money.
The FTT FTX signal is just the latest example. Other failed projects that have fueled the market downturn this year include Defi Network lending platform Celsius (CEL) and Terra (LUNA).
FTX is the opposite #Bitcoin #Bitcoin A protocol was created precisely to prevent Ponzi schemes, bank runs, Enron’s, WorldCom’s, Bernie Madoff, Sam Bankman-Fried’s…
…rescues and reallocation of wealth.
Some understand it, others not yet.
We are still early.
/21m
— Nayib Bukele (@nayibbukele) November 14, 2022
FTX stands for #Bitcoin #Bitcoin network protocol was created precisely to prevent Ponzi schemes, bank runs, Enron, WorldCom, Bernie Madoff, Sam Bankman-Fried … refunds and wealth redistributions. Some understand it, some don’t. It is still too early. /21m- Nayib Bukele (@nayibbukele) November 14, 2022
Created and operated by centralized entities, the supply of these tokens, and therefore the price, is vulnerable to manipulation: undisclosed pre-issue allocations, in-house venture capital operations, low volume compared to the total supply, etc. .
It was the exposure to these (junk) tokens, especially in the form of collateral, that brought crypto hedge funds Three Arrow Capital, FTX sister company Alameda Research, and many others to the ground.
“In our opinion, the crypto bubble that burst this year was in the atmosphere of tokens created for speculative purposes only,” BOOX Research noted, adding:
“While we can argue that cryptocurrencies are ‘bad money driving out good’, FTT and LUNA are just two examples that everyone could agree should not exist. »
Thus, a logging market for altcoins that should never have existed, including FTT, can further strengthen investor confidence in bitcoin. Early data points to the same, with CoinShares reporting an increase in inflows into bitcoin-based investment funds.
In fact, bitcoin-based investment vehicles pulled $18.8 million into their coffers in the week ending November 11, bringing year-to-date inflows to $316.50 million.
“Inflows started later in the week due to the extreme price weakness caused by the FTX/Alameda drop,” James Butterfill, head of research at CoinShares, noted:
“This suggests that investors see this price weakness as an opportunity, distinguishing between ‘trusted’ third parties and a system that does not. “.
Meanwhile, bitcoin is not seeing a drop in demand in the current bearer market compared to 2018 based on on-chain data.
The number of Bitcoin addresses with a non-zero balance continued to climb despite the downward price trend, reaching an all-time high of 43.14 million on November 16.
In comparison, the number of Bitcoin addresses with a non-zero balance decreased significantly in the 2018 bear market, which suggests that traders have become more confident of a price recovery, especially as the FTX domino effect disappears with unwanted elements.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Cointelegraph.com. Every investment and every trading operation involves risk. You should do your own research before making a decision.
Related posts:
Ethereum inventor Vitalik Buterin scolds Sam Bankman-Fried and FTX 
Binance buys FTX – Bitcoin crashes : Which three cryptos should you buy now? – Coincierge.de 
Deal out! Binance withdraws bid on FTX as bitcoin falls to $15k 
Is Ethereum dead? – Number two and the FTX scandal – and a cautious prognosis for the future – Coincierge.de
