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Jim Bianco biancoresearch.eth Profile picture
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Nov 9 • 11 tweets • 4 min read
1/10

The affair with @FTX_Official /Alameda is not over, and the market is worrying it could get much worse.

And yes, it can!

🧵
2/10

I think this is an honest assessment.

My take:

CZ was pissed, like many, at @SBF_FTX for bullying Congress to write the crypto bill to favor FTX and against the larger crypto industry.

CZ wanted to embarrass SBF, not kill him off in this manner.

3/10

So, when it came to light that sketchy things were going on between FTX and Alameda, CZ moved to "muzzle" SBF, to get him to back off on the money he was spreading around DC to personally write the crypto bill.

coindesk.com/business/2022/…
4/10

What CZ did not anticipate, and is now apparent, is how SBF squandered his trust in the industry.

So, at the first sign of trouble, everyone ran.

And they took a CZ's statement of displeasure over SBF and turned it into a wipeout that sunk FTX/Alameda in two days.
5/10

The big question now is, does CZ/Binance follow through and acquire FTX?

Remember they only signed a NON-BINDING letter of Intent subject to due diligence.

If they do, the counter-party risk is mitigated.
6/10

If not, a lot of people (read: other brokers, hedge funds institutional investors, in addition to retail degens) have FTX accounts, and if they cannot get their money out, they are in trouble.

This is one example. expect many more examples.

coindesk.com/business/2022/…
7/10

Word is CZ might walk away .. the problem is too big even for Binance to handle.

coindesk.com/business/2022/…
8/10

For now, think of BTC (chart) as a bet on whether CZ/Binance walks away.

As I write, it is breaking below $17k.

This signals the market is very worried CZ/Binance will not acquire FTX.
9/10

The problem is centralized exchanges/brokers. They are inherently unstable and prone to blow up. They do in tradfi all the time (2008, 2011 MF Global, 2020).

But they have the central bank money printer, and governments with taxing power, and large armies to backstop them.
10/10

The answer is true DeFi.

But I fear DC will think the answer is to make DeFi harder and push everything toward CeFi and impose tradfi regulations on them.

If so, all that will be accomplished is a digital version of the tradFi mess we currently have.
Bonus

Will this be the only winner?

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More from @biancoresearch

Jim Bianco biancoresearch.eth Profile picture
Nov 3
1/4
Actually ... the Cleveland Fed Nowcast has been too low. The actual results have consistently beaten this estimate.

So, expect these estimates to, again, be too low. These estimates might be a floor.

more ...

2/4
The actual result (blue bars, top) has beaten the last nowcast estimate (orange line, top) for 18 of the last 20 months (bottom).

Aug 21 and Jul 22 (red bars, bottom panel) are the 2 months the actual was less than the last nowcast estimate.

Oct is estimated at 0.78%
3/4
Same chart as above but for core inflation.

The actual result (blue bars, top panel) has beaten the last Nowcast estimate (orange line, top panel) for 10 of the last 12 months (red bard, bottom panel).

October is estimated at 0.54%.
Read 4 tweets
Jim Bianco biancoresearch.eth Profile picture
Oct 21
1/13

@NateSilver538 on why his models were not showing a Republican surge, like bettors.

fivethirtyeight.com/features/betti…

His answer ... "political betting markets sometimes aren’t that smart." and ... "traders don’t have a lot of technical sophistication about election forecasting."
2/13

@NateSilver538 has used the "they are stupid" line of reasoning before. It is the same one that CEOs of poorly performing stocks use.

Like those CEOs, this line of reasoning blew up last week ... again.
3/13

Before I go further, let me stipulate that I'm a big fan of @NateSilver538 and @FiveThirtyEight and think their models are great.

But as British statistician George E.P. Box famously wrote “All models are wrong, but some are useful.”

en.wikipedia.org/wiki/All_model…
Read 13 tweets
Jim Bianco biancoresearch.eth Profile picture
Oct 20
1/7
The old trader adage is to "never short a dull market," As this chart shows, this now applies to bitcoin.

Realized volatility (that is, backward or actual volatility) is at a 2+ year low and one of the lowest readings ever. Image
2/7
Bitcoins' price is trending sideways (black rectangle) leading to falling volatility. Image
3/7
Never short a dull market might really apply for ETH.

Post-merge, and post-merge hype, its realized volatility has collapsed to its lowest reading in at least 5+ years. Image
Read 8 tweets
Jim Bianco biancoresearch.eth Profile picture
Oct 15
1/4
The Bloomberg Global Aggregate Index is now down a staggering 21% YTD (right). It made yet another new low on Friday. For comparison, the S&P is down 23% on a total return basis.

This equates to a market value loss of above $14T (left), from ~$69T to~$55T. ImageImage
2/4
The Bloomberg US Aggregate Index, the bond market's version of the S&P 500, is down 15.84% through Friday, and also on a new low for the year.

Data goes back to 1976, and nothing remotely close has happened to this index before. (Left)

Market value loss is $2.3T (Right) ImageImage
3/4
Here is the chart of the Merrill Options Volatility Estimate or MOVE Index. Think of it as the VIX of the bond market.

It remains at some of the highest levels ever recorded. Such levels always coincide with problems (labeled).

Bonds remain at highly stressed levels. Image
Read 4 tweets
Jim Bianco biancoresearch.eth Profile picture
Oct 14
1/5
Biden yesterday:

“Today’s report shows some progress in the fight against higher prices, even as we have more work to do. Inflation over the last three months has averaged 2%, at an annualized rate. That’s down from 11% in the prior quarter,”

This is 100% correct
2/5
But it neglects to mention that energy (essential gasoline) is a big reason for this decline above.
3/5
So, when you look at inflation less energy, it was still running at a 6.75% pace in Q3.
Read 5 tweets
Jim Bianco biancoresearch.eth Profile picture
Oct 9
1/4
If you are asking when the Fed will moon stocks again, via printing, and when will this happen and push BTC to $70k ...

This era is over. See my feed today, a couple of threads on this.
2/4
Crypto needs to decouple to become viable. This will happen when they develop a real use case, other than degen speculation (which is what "institutional adoption" really is).
3/4
I believe crypto will find this use case, via DECENTRALISED payments. But first, CeFi Crypto, like Binance and SOL, all the Terra-related blowups, might have to go away or truly decentralise.
Read 5 tweets

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