Bitcoin Tops $19K, Blockchain.com Cuts Job, Sam Bankman-Fried Blogs

Sam Bankman-Fried, the disgraced former head of FTX, denied hiding billions of dollars and gave his take on what happened to his bankrupt crypto exchange in a lengthy new post on Substack published Thursday.

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• He denied having stolen funds and claimed that FTX and its sister company Alameda Research collapsed due to the meltdown of the crypto market and insufficient hedging on Alameda’s part.

• “I did not steal funds, and I certainly did not embezzle billions,” Bankman-Fried wrote. Later in the post he concluded that “Alameda lost money because of a market crash for which it was not adequately insured.”

• Although he alleged that the trading firm “failed to adequately hedge its market exposure,” he also said he “hasn’t run Alameda in recent years.”

• Bankman-Fried faces a number of federal charges including conspiracy to commit fraud, and is now free on bail at his parents’ home in California. He has pleaded not guilty to the charges, but his lieutenant and Alameda chief Caroline Ellison pleaded guilty to fraud charges and is now cooperating with an investigation by the US attorney for the Southern District of New York.

• While he blamed FTX’s downfall on Alameda’s poor defenseBankman-Fried notably did not take up the $65 billion line of credit he opened from the stock exchange to the trading arm, as was revealed in a court hearing Wednesday. At the hearing, an attorney representing FTX in the Chapter 11 bankruptcy proceedings said the credit limit has led to a “failure in value” in repaying customers and creditors.

Bitcoin (BTC): The largest cryptocurrency by market capitalization briefly touched $19,000 on Thursday – rising 8% for the day and reaching its highest level since the sharp market decline caused by the FTX crash in early November. Crypto-related stocks even posted bigger gains as the sector’s rally continued. BTC rallied earlier in the day after the latest US Consumer Price Index (CPI) report showed that inflation eased last month before experiencing a sharp increase in afternoon trading (ET). It had settled back down to $18,800 as of press time.

Stocks closed higher on Thursday after the positive inflation data: Both the technology-heavy Nasdaq Composite and the Dow Jones Industrial Average (DJIA) were up 0.6%, while the S&P 500 was up 0.3%.

Ether (ETH): The second largest cryptocurrency recently followed BTC’s direction, rising 6% for the day to trade around $1,427 at press time. As Ethereum’s upcoming Shanghai upgrade approaches in the spring, data from Etherscan shows that more than 16 million ETH have been deposited into Ethereum’s Beacon Chain stake contract as of Thursday, representing over $22 billion at current prices.

CoinDesk Market Index (CMI)

911.03

+54.7 ▲ 6.4%

Bitcoin (BTC)

$18,832

+1304.2 ▲ 7.4%

Ethereum (ETH)

$1424

+82.2 ▲ 6.1%

S&P 500 daily close

3,983.17

+13.6 ▲ 0.3%

Gold

$1900

+25.6 ▲ 1.4%

Treasury Yield 10 years

3.45%

▼ 0.1

BTC/ETH prices per CoinDesk indices; gold is the COMEX spot price. Prices from approximately 4:00 PM ET

Crypto Market Analysis: Inflation is cooling, but Fed Pivot hopes may be too warm

By Glenn Williams Jr.

Bitcoin and Ether reacted positively to the release of inflation data for December, with prices fluctuating as the day progressed.

BTC’s hourly chart shows a sharp increase in trading volume during the hour of the announcement. Most telling in that hour of trading is the momentary drop in prices, suggesting some traders saw the inflation data as an opportunity to take profits. ETH’s hourly chart shows almost identical price behavior, with a small increase upon release of the report, followed by a price decline in the following hour.

The odds that the Federal Reserve will raise interest rates by 25 basis points in February rose to 96% from 77% the previous day. Verbally, this can be categorized as a shift from very likely… to really, very likely. Traders are reducing their bets on a more aggressive rise of 50 basis points.

But the federal funds futures curve suggests rates will rise to near 5% before swinging lower in the second or third quarter of 2023. That remains largely unchanged — a sign that while the Fed may slow the pace of hikes, it will stick in tour mode for quite a while.

Read the full technical overview here.