💀 FTX (FTT) Collapse (November 2022)
Trading
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FTX (FTT) Collapse (November 2022)
📖 CONTEXT
November 6-11, 2022: FTT (FTX Token) crashed from $25 to nearly $0 in 5 days following revelations of FTX's $8B shortfall and misuse of customer funds. A 5-round martingale with 15% price interval bought at: $25.00 (Round 1), $21.25 (Round 2), $17.50 (Round 3), $13.75 (Round 4), $10.00 (Round 5). Even with 60% price coverage (15% × 4 rounds = 60% below entry), the sequence hit all rounds as price collapsed to $2, then $0.50. By Round 5 at $10.00 (60% below entry), the trader had deployed $10,000 with no recovery in sight. FTX filed bankruptcy November 11th - price never recovered.
💰 SEQUENCE FAILURE:
• Total Capital: $10,000
• Bet Structure: $613.50 (Round 1), $1,042.95 (Round 2), $1,717.80 (Round 3), $2,699.40 (Round 4), $3,926.40 (Round 5)
• Price Interval: 15% from initial price
• Buy Prices: $25.00 → $21.25 → $17.50 → $13.75 → $10.00
• Round 5 Price: $10.00 (60% below entry)
• Final Price: ~$0.50 (98% loss from Round 1)
• Total Capital: $10,000 → Total Loss
⚠️ LESSON: Martingale assumes mean reversion - that price will eventually recover. In fraud, insolvency, or rug pulls, this assumption breaks catastrophically. Even 60% price coverage couldn't save this sequence when the asset went to zero. Crypto crashes beyond 60% have happened multiple times (LUNA, FTT, countless altcoins). No spot strategy can profit from a -99% move. That's why instrument selection is key: volatility, liquidity, but also fundamentals, teams, project transparency. Risk management starts with choosing the right assets - not just optimizing round allocation.