Self Custody or Don't Participate
The aftermath of Sam Bankman Fraud and why self custody is so critical.
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Cheat Sheet -
Support and resistance levels and our daily, weekly and monthly bias on BTC, GOLD, OIL, ES, and NQ as well as our favorite altcoins
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What We Are Watching
We further breakdown our case for these cryptos here : What We Are Watching
Crypto News
Bahamas approves provisional liquidators for FTX assets (The Block)
FTX-acquired crypto exchange Liquid suspends withdrawals (The Block)
Nomura's crypto hiring slows, aims for first product by mid-2023 (The Block)
Wallet that drained FTX accounts starts swapping millions of dai for ether (The Block)
Privacy-Enhancing Crypto Coins Could Be Banned Under Leaked EU Plans (CoinDesk)
Solana DeFi Sees Almost $700M in Value Wiped Out on FTX Fallout (CoinDesk)
Crypto Fund Sino Global Regrets Its 'Misplaced Trust' in FTX, Reports 'Mid-Seven' Figure Losses Tied to Exchange (CoinDesk)
Sam Bankman-Fried is ‘under supervision’ in Bahamas, looking to flee to Dubai (CoinTelegraph)
US Politicians Donate Bankman-Fried Cash to Charity (Blockworks)
FTX Doom Draws Dozens of Federal, State, International Agencies (Blockworks)
Visa ‘Monitoring’ FTX Situation After Nixing Deal With Felled Exchange (Blockworks)
FTX Attacker Still Owns Altcoins Worth $338 Million (Decrypt)
Not Your Keys, Not Your Crypto
If you haven’t heard this already well, the best thing we can do today at Foot Guns today is not to help you understand where the Bitcoin price is going next but reiterating the fundamental reason someone invests in crypto to begin with. As it’s been pointed out here by our friend on the Trading desk, Bitcoin does not give you a yield or promised return on your investment. If that’s what you are looking for then you can invest in individual equities or indices that pay dividends based on the productive returns on the underlying company or companies. Bitcoin really own offers one thing the ability to self custody your coins and in doing so you gain the right to send those tokens to whomever using the blockchain.
Any crypto that is worth a damn has properly implemented the ability to self custody your assets. The way it works is when you create a Bitcoin wallet you effectively create two impossible to guess, random groups of numbers, and one of those numbers is the secret code that allows you to move the funds and the other number is the same as your bank account number that you give to others who can then send you funds. That’s it really, the magically power of Bitcoin is the ability to store it how you want and send it to whomever with no third party ever taking possession of the assets.
The world being the silly place it is… As we learned last week, most people are completely ignoring this feature of Bitcoin and instead throwing money around like they are at some vegas casino and buying anything that walks by with a nice looking tail (especially if it barks). People are allowed to spend their money as they please , bu today we just want to make it clear the power crypto has when you purchase it. Sure, if you are in the business of day trading or making markets then you have no choice but to leave some of your funds on exchanges to be able to actively participate in the order books. If your investment time frame is longer than a month than we would highly suggest you take custody of your crypto by moving it off exchanges into a hardware wallet.
By leaving it on exchanges you are not only now exposed to the wild price volatility of crypto but you are allowing third parties the chance to lose your coins for your. And since most of these exchanges (FTX was one of them) are not federally insured, when they lose or in this case probably steal your money, then you have no way to get it back.
For a limit time we are making part 1 of our How To DeFi Series Free to help you learn how to self custody your crypto. Please, please, if you are going to continue to hold crypto consider buying a hard wallet and removing your coins from exchanges when you are not explicitly buying or selling. It’s easy to move the coins back to an exchange when you are ready to sell back into fiat. The third party custody risk is not worth it as we saw with FTX.
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