Collateral Damage

It’s a bloodbath out there, and there’s no way to make it sound any better than that. 

If you want to know what the heck happened with FTX ($FTT.X), read yesterday’s quick post that highlighted what happened. 

In a nutshell, CZ’s weekend Tweet send the FTT token into a death spiral, with customers basically performing a run-on-the-bank. FTX couldn’t keep up and got behind and needed a bailout – that’s where Binance comes in. 

You’d think that FTT might get a bit of a recovery if Binance is interested in buying them out, right? Nope, that didn’t and isn’t happening. 

Before the normal market close, the nail in the coffin for FTT hit home when news broke that Binance is not acquiring FTX. 

Let’s take a look at everything that has gone down today:

1. Bloomberg reported at 11:11 AM EST that SEC and CFTC are scrutinizing FTX’s relationship with FTX.US.
2. SEC probe into FTX cited as one reason Binance walked. Regulators are investigating whether FTX.com mishandled customer funds.
3. Two company sites that are part of SBF’s empire have gone dark: FTX Ventures and Alameda Research.
4. Reports start coming in that FTX was denied $1 billion in emergency funding from Wall Street and Silicon Valley entities before ultimately reaching out to Binance.
5. Another report from Semafor reported that FTX’s legal and compliance staff quit.

Even CZ seems exasperated by it all:

Sad day. Tried, but 😭

— CZ 🔶 BNB (@cz_binance) November 9, 2022

Investors and traders alike are understandably afraid that if FTX wasn’t safe – which exchanges are? One method of showing transparency and trust is the Proof-of-Reserves protocol. 

Proof-of-Reserves is a public audit by a third-party accounting firm to show that customer deposits/funds/crypto are held and safe and records are accurate.

Today, crypto exchanges OkX and KuCoin Tweeted they are beginning the process of showing Proof-of-Reserves, with OkX announcing their report in the next 30 days. 

This is a major news event that continues to change, we’ll keep you updated as events unfold. 

It’s been an ugly couple of days in the crypto world – so let’s start off with something humorous. 

Yesterday, on the UpOnly stream, two infamous individuals were present: Pharma Bro Martin Shkreli and South Korean fugitive Do ‘Con’ Kwon.

The part worth watching is only 25ish seconds long and can be watched here on YouTube.

Yes, Shkreli just did that. Not long after the video ends, Kwon says the conversation is ‘very depressing’ and then abruptly leaves the stream. 

Authorities still don’t know where Kwon is, but it is believed that he is in Europe, somewhere. But he says he’s not running. 

And without a valid passport, it will be hard for him to go anywhere anytime soon. 😆

It’s been a crazy couple of days for crypto; horrible might not even be the right word for it. We won’t spend much time in this Technically Speaking article, but the two big dogs, Bitcoin ($BTC.X) and Ethereum ($ETH.X) are at critical breakout points to the downside. 

And it’s not just Bitcoin and Ethereum, but the broader market as a whole. Despite some altcoins outperforming BTC and ETH, their individual technical levels all scream pretty much the same warnings that we’ll see on BTC’s and ETH’s charts. 

FTX

I don’t think this chart needs a whole lot of introduction. It’s FTX’s token, $FTT.X.

What else do you need to know? Tuesday’s blood bath put FTT from an open of $22.21 to a dismal close of $5.43, a -75.44% drop. Yesterday’s only bright side was the recovery from its $2.73 low.

And today didn’t get any better, just worse. At the time of writing, FTT fell below $2 to an intraday low of $1.74, that’s a -68% loss. From yesterday’s open to today’s low, it’s a mind-boggling-92% collapse. 

Many traders would say this pattern is very “LUNA-esque.”

Bitcoin

The first image you’ll see below is from the October 10, 2022 issue of the Litepaper.

Long story short, traders at the time were concerned about the existing triangle pattern and how it resembled the same structure found in some of Bitcoin’s biggest sell-offs. 

The article discussed the common behaviors analysts see with triangle patterns, one of them being a breakout followed by a failed retest. Many believe that’s what’s happening now.

So what does this potentially mean for Bitcoin ($BTC.X)? If history repeats itself, traders suggest we could see a substantial drop toward the $11k value area. 

The chart above is Bitcoin’s weekly chart – that is one heck of an ugly red candlestick on the weekly chart. Unless you’re a bear, then you’re pretty happy. But look at the Volume Profile. 

There’s a massive gap between $17,800 and the next high-volume node at $11,600. Traders often suggest that large gaps between high-volume nodes often act like vacuums where price action gets sucked through it to the next high-volume node. 

Ethereum

Ethereum’s ($ETH.X) monthly chart looks very dangerous to many traders. It’s on the edge, like mid-way through Collective Soul’s The World I Know music video, when the distraught man is ready to jump. 

This music video needs to hurry the eff up to the part where Ethereum has a pigeon land on its arm and take out a bagel to feed it and realize it’s got something to live for. 📈

For now, though, these charts give market participants little to be positive about. As always, we’ll monitor the charts our community is watching and any insights they share in our next issue.