Note: This post was originally published on LinkedIn in Sep't 2023
FTX is back in the news this week. It was a nice write up in FT Alphaville that caught my attention. But as ever, some of the best insights are in the comments.
(https://lnkd.in/eQD5eJ2n)
What is starting to emerge is a more comprehensive picture of the assets held - circa US$7byn.
That is some market overhang, which in turn raises the questions of liquidity and transparency (information leakage).
There is also a variance in the quality of these assets - with only some US$560 million in BTC.
(https://lnkd.in/e6s7WNxy)
FTX is worried about information leakage and they need this pre-approved.
(https://lnkd.in/eQ6KHc_H)
What struck me about this, was in equity markets we had the debate about Dark Pools in 2017. (https://lnkd.in/e9QUw3sJ).
And we took our learnings from it in 2020. (Liquidity shifts, if you push it out of the Dark, onto the CLOB, it migrates to the closing Auction - kinda like a stress ball, squeeze one place, it'll pop up elsewhere).
(https://lnkd.in/e6rAczm8).
There is growing maturity in liquidity and how it is reported in crypto markets.
(https://lnkd.in/ePpYdNdw).
So all this gets me thinking about the learnings from TradFi that we cast across into the emerging digital (crypto) markets. Crypto natives have done a lot - but so has TradFi. Right now there feels like some polarisation between the two camps, but I believe this will converge.
There is also an interesting read out from WFE (TradFi) on a review of crypto-trading infrastucture. What this report is silent on, is latency and through-put. There is a (I would say material) difference between the resilience and capacity of regulated TradFi systems and the unregulated CEXs of the world.
(https://lnkd.in/et9cn6bE).
The picture, I do like. The associated video I can't really recommend, but what it does show, is the huge conflicts of interest that exist in unregulated CEXs.
(https://lnkd.in/egvRTQHP).
Meanwhile, there is a Rugby World Cup on. Already the Wales / Fiji and France / Namiba games remind us of the unique nature of these events. For those that follow the code - enjoy! But whatever your leisure, may it be a pleasure.
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