Sam Bankman-Fried traded lucrative arbitrage opportunities in crypto and became a billionaire by 29. The FTX CEO told Insider about the 2 types of trading opportunities in the $2 trillion market today. He also shared why he is “a huge fanboy of Solana” amid the rise of decentralized finance.He used to make 10% daily return in 2017.
In just four years, Sam Bankman-Fried has become the richest person in crypto with a net worth of $16.2 billion and an empire that encompasses a crypto hedge fund, centralized and decentralized exchanges, as well as high-profile sports and esports sponsorships.
In 2017, Bankman-Fried, a former trader on the international ETF desk of Jane Street, launched a crypto-trading firm called Alameda Research , which now manages over $1 billion in digital assets. In 2019, he co-founded FTX, a crypto exchange that was last valued at $18 billion after a $900 million funding round in July.
The majority of his wealth is tied up in FTX’s equity and tokens (FTT), according to Forbes , but the rapid ascent of the 29-year-old billionaire also has had a lot to do with his million-dollar trades that generated 10% or $20 million daily return in 2017. Back then, there was no liquidity in crypto but massive excitement and attention enveloped the market as bitcoin’s price surged amid a raging bull cycle, Bankman-Fried recalled.
An icon in the shape of a lightning bolt. Trending Tech Insider Mailchimp insiders react to employees getting no equity from Intuit sale “For the first time, there’s absolutely massive volume and flow in crypto. People were buying and selling a lot of tokens, but there were no liquidity providers or very few of them,” he told Insider in an interview at the SALT NY Conference .
The lack of liquidity helped enable lucrative arbitrage opportunities that exploit bitcoin’s so-called kimchi premium , Japan premium, and even price divergences on two different US exchanges. “You just see a lot of retail coming in and buying on one platform, the price would go up there, and liquidity providers could not handle it,” he said.
“That market, which has diverged completely from other markets, created a big trading opportunity, big arbitrage that ultimately means customers were not able to get good prices on their trades.”
The crypto market has become substantially more liquid today as crypto-native liquidity providers like Alameda and other multi-asset class liquidity providers such as high-frequency and quant trading firms have jumped in to trade crypto over the last four years.
“Collectively, the capital at play to keep markets in line has been able to get closer to the capital being deployed into crypto so that markets have fewer dislocations, less arbitrage, less good trading, but more fair prices and more volume,” he said. The 2 types of trading opportunities in crypto today As the crypto market becomes more liquid, trades that generate 10% daily return […]
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