‍About: Investoom Weekly is the newsletter by the market intelligence company Investoom that provides AI-powered investment insights through social sentiment data, onchain data and financial data. Investoom democratizes the access to hedge fund insights.

Overview of the topics

• Crypto Highlights: In less than one day, the personal wealth of the CEO of FTX, Sam Bankman-Fried, has plummeted 94% to $991.5 million.
• Financial Data: The largest crypto exchange in the world, Binance, has just pulled out of a deal to acquire one of its major competitors, FTX.
• Social Data: Bitcoin is now firmly below the $17,500 mark, a 14.62% dip over the last seven days.
• Onchain Data: The international operations of FTX have an higher value than the deposits of the company’s clients.
• Deep Dive: FTX needs $4 billion to stay solvent, with a funding gap of nearly $8 billion.

‍

Crypto Highlights

The CEO of FTX lost 94% of his wealth

In less than one day, the estimated personal wealth of the CEO of FTX, Sam Bankman-Fried, has plummeted 94% to $991.5 million. The liquidity crunch and the past declarations of the CEO of Binance made nearly $14.6 billion of his fortune vanish overnight.

How? His stake in FTX was worth $6.2 billion, while another $7.4 billion of its personal assets came from Alameda Research, his crypto trading house. As a result of the latest events, FTX and Alameda are given a $1 value, wiping out the largest holdings of Bankman-Fried. Even if losses of these levels are common among the world’s richest men, rarely a billionaire has lost such a huge amount of his wealth.

However, Sam Bankman-Fried was described as one of the most “altruists” among the world’s richest men. During the past year, he announced that he would have donated the majority of his fortune, at that time estimated at $21 billion, to charity.

‍

Financial Data

The acquisition of FTX in a nutshell

The largest crypto exchange in the world, Binance, has just pulled out of a deal to acquire one of its major competitors, FTX, nearly 24 hours after the agreement. In fact, the corporate due diligence process on FTX customers’ funds made the company question the feasibility of the acquisition.

In fact, even if the initial aim of Binance was supporting FTX’s customers to provide liquidity, the company declared on Wednesday that the issues were beyond their “control and ability to help”. Earlier that day, Changpeng Zhao, the CEO of Binance, also warned staff members that the acquisition was no more a part of Binance’s corporate strategy.

FTX, which was valued at $32 billion in a financing round this year, could be on the verge of insolvency. The company has already lost more than 80% of its value at the beginning of the week, falling to $5 and wiping out nearly $2 billion in a day. On Wednesday, however, it dropped to $2.30, shrinking the total value of its tokens to $308 million.

The price of the token could drop even further. Within an internal letter, Venture capital firm Sequoia Capital declared it will disinvest over $210 million in the crypto exchange, provoking a further negative sentiment towards FTX and its native currency.

Nevertheless, the consumer price index jumped only by 7.7% in October,the smallest 12-moth increase since January 2022. Thus, since economists expected a 7.9% rise, inflation could soothe negative expectations toward the crypto market as a whole.

‍

Social Data

BTC and ETH prices are plunging

When investors discovered that one of the largest crypto exchanges in the world, FTX, could have been insolvent, the whole market crashed. Bitcoin is now firmly below the $17,500 mark, a 14.62% dip over the last seven days. It is the first time that it has dropped that low since November 2020.

The past week’s crash, however, didn’t bring a reversal only for Bitcoin. After weeks of stability, also Ethereum prices went down 16.8% to $1,267. In fact, even if both tokens were threatened by the rise of interest rates, the crash of the stock market crashes and the Ukraine war, they were “relatively” steady.

“For a long time, bitcoin has aligned itself with broader risk appetite in the markets but it goes without saying that Tuesday was not one of those days,” declared the Oanda market analyst Craig Erlam. Hence, it is not surprising to discover that the Bear & Bull Index for BTC has collapsed to 0.045, denoting an extremely bearish market.

The latest crypto crash was reflected also in the tweets published in the past week. The investors of the social media have mentioned nearly 400 times per day FTX and the consequences that it has caused to the main cryptocurrencies, first of all, Bitcoin and Ethereum.

‍

Onchain Data

FTX needs an $8 billion bailout to cover its shortfall

According to the latest data, on Thursday the public wallet of FTX began to execute outbound transactions from 03:39:11 PM. These activities were preceded by a 48-hour period in which the company was only dealing with deposits. The CCO of Nansen, Andrew Thurman, noticed that “Withdrawals are coming in hot now and lots of folks are getting out large sums”.

However, within an hour since withdrawals, the company has experienced a net outflow of more than $6.7 million. At the beginning of the week, the company received over $450 million in withdrawal demands. The CEO Sam Bankman-Fried has then announced that FTX needed an $8 billion bailout to recover the customers’ requests.

On Wednesday Bankman-Fried declared that the international operations of the company have a total market value of assets and collateral higher than clients’ deposits, but it is “different from liquidity for delivery, as you can tell from the state of withdrawals.”

‍

Community

Interested in what the other readers think about it? Join our community on Discord and discuss our insights with other investors! [Join Discord]

‍

News of the week

• Exchange: Exclusive behind FTX's fall, battling billionaires, and a failed bid to save crypto. [Read more]
• Bitcoin: Single-issue crypto voters weigh in on midterms before US Election Day. [Read more]
• Twitter: Ten days of Twitter chaos. [Read more]
• Crypto crash: Crypto.com to publish audited proof of reserves, CEO says. [Read more]

‍

Read the full version here.

‍

About

Investoom is a Munich-based Fintech Startup democratizing the access to quantitative investment insights that are used by big hedge funds, but are inaccessible to retail investors. We are a market intelligence company that provides AI-powered investment insights through social sentiment data, onchain data and financial data.

Disclaimer: The Investoom newsletter is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions. [Read more].

Advertising and sponsorship do not influence editorial decisions or content. Third party advertisements and links to other sites where products or services are advertised are not endorsements or recommendations by Investoom. Investoom is not responsible for the content of the ads, promises made, or the quality or reliability of the products or services offered in any third party advertisement.