You may have noticed that the cryptocurrency market has been quite turbulent over the past few days. Nevertheless, I thought it fitting to provide an update on what has transpired so far this week.
The fact that the crypto exchange FTX is on the brink of collapse after a damning report on the internal accounting of an affiliated crypto fund highlights the increasing need for transparent decentralized systems for transactions without intermediaries. Indeed, it was precisely due to a lack of transparency that FTX could inflate the value of its own cryptocurrency, FTT, to borrow more money and then use it to patch up holes in its accounting—a practice that jeopardized all unsuspecting users of this platform.
However, I have no doubt that the crypto market will survive this setback, just as the collapse of one trading platform will not slow down the march of innovation. I only need to recall 2014 when the then-dominant exchange MtGox (handling 70% of total Bitcoin volume) collapsed, yet Bitcoin itself did not face insurmountable problems (three years later, the largest digital currency was flourishing again).
The fact that FTX, which until recently held only 6% of the total traded crypto volume, is now on the verge of falling does not concern me at all for the long-term future of the crypto universe as a whole and/or Bitcoin in particular.
As for the portfolio, It never used the FTX platform, so there is no exposure to specific FTX risks. Regarding the tokens FTT and SOL (which FTX has a significant amount of on its balance sheet), I intentionally avoided them because their developments and characteristics do not align with my investment philosophy, lacking the decentralized qualities I seek.
Finally, regarding the results this week (as of now), while Bitcoin is currently facing a loss of -13%, our portfolio is at a preliminary loss of -6.5%.
update: 10-11-2023 Sam-Bankman-Fried was arrested and found guilty by jury on all 7 counts of fraud, he is now facing 110 years in prison.
