Montana introduced an amicus curiae in the case of the SEC vs. Kraken, a US-based crypto exchange, criticizing the “regulatory power grab” of the institution. Montana, supported by seven other states, affirms that crypto assets are not automatically securities and that the SEC’s expansive concept of “investment contract” might preempt state legislation. Montana and Seven […]
Bitcoin News
Kraken’s Jesse Powell Blast FTX And Sam Bankman-Fried Without Naming Them
Leave it to Jesse Powell to say what everyone in crypto is thinking. “I’m really trying to control my rage,” the mind behind Kraken tweeted to begin his rant. In the following article, we’ll comment on several of his very interesting points. Make no mistake, though, Jesse Powell thinks this isn’t over and the crypto industry will have to work for years to make up for… some other cryptocurrency exchange’s mistake. “More business failures are sure to come as the contagion spreads,” he warned.
2/ Our good, trusting nature makes us easy targets for con artists. Some even tell us straight up that they're here for profits, not crypto, and we praise them for their honesty.
Yet we're surprised when they turn out to be who they said they are. We need to raise our standards.
— Jesse Powell (@jespow) November 10, 2022
At one point, Powell even gave the best advice possible for future crypto investors. “Don’t trust. Verify.”
What he didn’t do, though, was naming Sam Bankman-Fried, FTX, or Alameda Research. We are assuming this is all about them, but it’s just an assumption.
Jesse Powell Allegedly Blast Sam Bankman-Fried
First of all, the head of Kraken doesn’t buy the “I made a mistake” line that Sam Bankman-Fried has been feeding the public via Twitter. And Powell doesn’t mince words while saying he doesn’t.
“This isn’t about aiming high and missing. This is about recklessness, greed, self-interest, hubris, sociopathic behavior that causes a person to risk all the hard-won progress this industry has earned over a decade, for their own personal gain.”
The thing is, Sam Bankman-Fried didn’t only blow up his two billion-dollar businesses. He blew up the whole crypto industry. “We give them power to speak for us but they haven’t earned that privilege. When they blow themselves up, it’s our house, our reputation, our people which bear the brunt of the damage,” Powell tweeted. And he’s probably right about this. Everyone will have to pay for Bankman-Fried’s mistakes.
5/ The damage here is huge. An exchange implosion of this magnitude is a gift to #bitcoin haters all over the world. It's the excuse they were waiting for to justify whatever attack they've been keeping in their back pocket.
We're going to be working to undo this for years.
— Jesse Powell (@jespow) November 10, 2022
Then, in a bizarre turn of events, Jesse Powell brought bitcoin into the mix:
“An exchange implosion of this magnitude is a gift to bitcoin haters all over the world. It’s the excuse they were waiting for to justify whatever attack they’ve been keeping in their back pocket.”
What does the FTX implosion have to do with bitcoin? In fact, out of all the crypto world, bitcoiners are the less affected by all of this. In bitcoin culture, the self-custody of your assets is paramount. And people who make the effort and self-custody aren’t directly affected by exchanges blowing up and losing their customer’s hard-earned money. They are affected by the price movements these black swan events generate, though.
FTT price chart for 11/10/2022 on Binance | Source: FTT/USD on TradingView.com
Are The Media, VCs, And The US Government To Blame?
This is the most interesting part of Jesse Powell’s rant. As bitcoiners denounced Sam Bankman-Fried’s shady business model left and right, the man became a media darling like few others. His frequent political donations, the way he said what the establishment wants to hear about crypto regulation, and the whole myth about him being an effective-altruism vegan were the perfect combination.
“VCs, the media, the “experts” failed. People torched their own reputations vouching for individuals, projects, businesses they had not diligenced.”
We’re pretty sure “diligenced” is not a word, but Jesse Powell’s message stands. The media failed miserably and led retail astray. They will never admit to their wrongdoings, but Sam Bankman-Fried was on the cover of “Fortune” a couple of weeks ago. “The New Warren Buffet?” was the article’s title.
9/ Red flags:* acting like you know everything after showing up to the battle 8 years late* 9 figs buying political favor* being overeager to please DC* huge ego purchases, like 9-fig sports deals* being a "media darling", seeking out puff pieces* EA virtue signaling* FTT
— Jesse Powell (@jespow) November 10, 2022
What about VCs, though? Aren’t they at least partially responsible for financing FTX? Before you answer, read what Jesse Powell has to say about it. He’s got inside information:
“I know for a fact that VCs wrote checks blindly. Why? Because revenues were strong. Were they sustainable? Were they bleeding out money the other side? Was it all predicated on an untenable self-dealing setup, frontrunning clients, misappropriation of user funds? Never asked.”
11/ US lawmakers & regulators have some accountability too. You drove this business offshore because you refused to provide a workable regime under which these services could be offered in a supervised manner. Enforcement wrongfully focuses on convenient, on-shore good actors.
— Jesse Powell (@jespow) November 10, 2022
Last but not least, what about the US Government and its lack of crypto regulation clarity?
“US lawmakers & regulators have some accountability too. You drove this business offshore because you refused to provide a workable regime under which these services could be offered in a supervised manner.”
Jesse Powell is not saying those institutions are as guilty as Sam Bankman-Fried allegedly is, but they really dropped the ball on this one. And, as it always happens, the people suffered.
Featured Image by Luke Jernejcic on Unsplash | Charts by TradingView
NewsBTC
Bitcoin Bulls Constantly Exhaust Kraken’s Liquidity Pool: CEO
Bitcoin bulls are constantly exhausting the US dollar reserve pool for opening leveraged Long positions, revealed Jesse Powell of Kraken – a US-based cryptocurrency exchange.
The chief executive officer told Youtuber Ivan on Tech in an interview that the number of traders who believe that the bitcoin price would go higher is more than those who believe in the opposite. The upside sentiment, therefore, prompts a majority of traders to borrow funds from Kraken to increase their Long positions in the bitcoin market. Many a time, the absence of Short traders – those who believe that the bitcoin price would fall, misbalances the liquidity. As a result, the margin pool keeps getting exhausted.
“There is always a broad disagreement about what the price should be. There is always someone who wants to Short bitcoin […] We definitely have a way more demand to go Long Bitcoin. But, we have got only so many dollars in the system. The margin pool for borrowing dollars to buy bitcoin is constantly being exhausted, which proves that people are bullish.”
The Near-Term Effect
Exchanges in the cryptocurrency sector offer traders to leverage up to 100 times than their principal cash balance. That means an investor with, say, only a dollar in his trade account can bet up to 0 in a single trade. In case bitcoin moves in the direction as intended by the Long traders, he/she makes multiplied gains from their 0 position. If not, then he/she loses more than 0 from their one dollar trade account. Overall, the amplified upside potential is why traders find leverage exciting.
Powell indicates that not many traders bet in favor of a bitcoin price fall, which means a majority of them are bullish. The sentiment serves as an indicator that the market prefers the cryptocurrency at a much larger value than where it is today.
Nonetheless, since the leveraged trades are short-term mostly, they cannot determine bitcoin’s long-term bias. The answer to that query lies in the macroeconomy – that in the US dollar shortage.
Travis Kling, the founder & chief investment officer of crypto asset management firm Ikigai, noted in September that a global liquidity crisis is underway. The former Wall Street executive referred to the Federal Reserve’s repo rate program, wherein the US central bank overnight injected hundreds of billions of dollars into the banking system. He added that investors started dumping their bitcoin positions to get as much cash on their hands as they can.
Some smart investors that actually like and respect me say I'm crazy for thinking that Global Macro has a big effect on crypto.
I think they're crazy for thinking these two things are entirely unrelated. pic.twitter.com/xYTSJVbCY7
— Travis Kling (@Travis_Kling) September 25, 2019
Dollar Shortage is Good for Bitcoin
With Kraken revealing a higher demand for bitcoin against lower liquidity, and a global dollar shortage issue underway, some analysts also believe traders would not exit their Bitcoin positions as a defense. Game liquidity theorist Majin said that a dollar squeeze is bullish for the cryptocurrency thanks to its low correlation with the dollar-denominated mainstream markets.
“Bitcoin is relatively easier to control versus the huge global regular finance market,” he said.
The post Bitcoin Bulls Constantly Exhaust Kraken’s Liquidity Pool: CEO appeared first on NewsBTC.
Kraken’s $1 Billion Futures Trading Volume Prove Crypto Demand is Very High
Kraken’s acquisition of the UK-based cryptocurrency futures provider Crypto Facilities led the platform on a high trading volume spree, according to their latest statements.
Sui Chung, the head of indices and price products at Crypto Facilities, confirmed that the trading volume on their futures platform increased by 565% following Kraken’s 0 million acquisition. In total, the platform recorded billion worth of trades in over a 30-day timeline across all its products: bitcoin, ether, litecoin, bitcoin cash, and XRP.
At the same time, Crypto Facilities noted a higher number of signups, as Kraken’s large clientele entered the futures trading platform.
Kraken launches futures trading via nine-figure deal, will soon close a fundraising round at B valuation, has 100 devs and growing, reveals consumer-friendly rebranding, and launches the first podcast to show juicy inner workings of a crypto company.https://t.co/WEIzjxzE8C
— Kraken Exchange (@krakenfx) February 4, 2019
The figures also served as an example of how a bruised-and-battered cryptocurrency market was recovering from the horrors of a bearish 2018.
Growing volume on an FCA-regulated crypto futures platform indicated the willingness of spot traders to explore opportunities in the crypto derivatives market.
Crypto Futures and Speculations
A rise in the number of futures trading contracts indicates the traders’ willingness to speculate on the value of the underlying asset. In the case of cryptos, the spot price market is largely unregulated, which makes futures trading a riskier alternative to potential investors.
However, Crypto Facilities relies on a regulated spot pricing index for cryptocurrencies, which also provides data to the CME CF Bitcoin Reference Rate, a US bitcoin futures offering. The move ensures that the market remains protected from price manipulation.
Therefore, when more traders start speculating on the value of cryptocurrencies via futures, it ends up reflecting their trust on the underlying spot. It does not mean that the cryptocurrencies in Crypto Facilities’ portfolio are bullish. Instead, it indicates that traders are willing to take risks on the price movements of the certain cryptocurrencies, now that they have a reliable underlying price index to begin from.
Higher Liquidity
The other reason why traders are taking an interest in Crypto Facilities’ futures offerings is liquidity, especially for the futures contracts of smaller cap coins. In his press statement, Chung noted that after Kraken’s acquisition, the liquidity for bitcoin and ether contracts increased by 200%. At the same time, the liquidity for bitcoin cash and litecoin contracts increased by 1,000%.
Futures markets are inherently liquid because they are traded in huge numbers every day. There is a constant presence of buyers and sellers that ensures quick market orders. Also, it entails that the cryptocurrency prices do not act volatile whenever the futures contracts come near their maturity.
Therefore, brokerage firms could clear large orders without leaving any adverse impact on the cryptocurrency market in concern.
All and all, the massive presence of traders in a regulated cryptocurrency futures service like Crypto Facilities points to an increasing institutionalization of the crypto markets. The volume speaks a lot.
The post Kraken’s Billion Futures Trading Volume Prove Crypto Demand is Very High appeared first on NewsBTC.