Is FTX Token (FTT) A Good Investment? In-depth Analysis and Near to Longer-Term Expectations
Is FTX Token (FTT) A Good Investment? In-depth Analysis and Near to Longer-Term Expectations

By CryptoBoomer | Investments | 3 Apr 2020


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Margin trading has become more and more popular in the past year. Different from 2016 or early 2017, where spot trading was technically unchallenged, nowadays, margin trading is arguably almost as popular as spot trading itself. Look at BitMex as one example. It’s extremely popular right now. 

The fact that you can go both long and short of making a profit in margin trading makes it more appealing compared to standard spot trading. And don’t forget that leveraged trading is also quite common in margin trading. The problem is that many crypto traders still feel uncomfortable putting their money unattended in a crypto exchange for a long time. These traders want to have access to leveraged trading but still have full access to their own tokens.

This is where FTX fits in. FTX is a cryptocurrency derivatives exchange that tries to bridge the gap between leveraged trading and traditional token HODL-ing mindset. Thanks to FTX, there are tokens whose values represent a leveraged valuation of popular cryptocurrencies. For example, people who predict that Ethereum would fall in the next 24 hours can easily hold the leveraged ETH-short token that was issued by FTX. It is very convenient for non-margin traders who want to hold tokens instead of directly trading on a margin trading platform.

What’s even better, FTX has its own utility token called the FTT. The idea is that FTT should rise when FTX itself gets more popular. So, here’s the important question. Is it worth it to invest in FTT? Let’s find out together!

FTT - Summary

So, the exchange is called FTX. Just like I mentioned above, FTX is a crypto derivatives exchange with specialization of leveraged tokens and futures. Not only that, but FTX also provides an option to do over the counter (OTC) trading.

FTX itself was first launched in April 2019, and it became popular quite fast. FTX is supported by Alameda Research, a known trading company and liquidity provider with almost $100 million worth of assets and more than $1 billion per day trading volume.

The concept of FTX is pretty straightforward. It is a cryptocurrency derivatives exchange that tries to cover all kinds of traders. From the professional trading firms to the casual users. Other than the standard futures trading, it also offers leveraged tokens. As mentioned in the introduction part above, leveraged tokens take FTX one step further above its competitions.

With the leveraged tokens such as BULL and BEAR tokens, traders can manage their own risk and skip all the unnecessary learning curves. For example, BEAR token is basically 3x Short Bitcoin token. When Bitcoin loses its valuation against USD, and you want to get 3x profit by predicting that Bitcoin would fall, you would buy BEAR token. When you believe Bitcoin would rise, and you try to triple your profit, you buy BULL token instead of the real BTC. One other benefit with these leveraged tokens is that the users don't have to pay fees unlike with standard margin trading platforms.

This is an advantage for casual traders who don’t want to learn all these new buttons and terms in the leveraged trading platform. Also, you are minimizing your risk, because you hold a token that “represents” the leveraged trading value, and you can easily withdraw the same token to your own crypto wallet. There’s technically no risk from stop losses, limits, fees, or even slippages.

As for the token itself (FTT), it’s a utility token that empowers the exchange. FTT token has various use cases such as weekly buying and burning of fees, lower trading fees in the exchange, rebates for OTC trading, collateral for futures trading, and socialized gains from the insurance fund.

The idea is that the more popular FTX and its leveraged tokens, the bigger the natural demand we would have for FTT. This is why FTT’s popularity rises quite rapidly as FTX itself has become famous.

It’s also important to note that you are also allowed to go long or short on various things on FTX platform, even the US election itself.

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Many other crypto derivatives exchanges don't have this option

They want people to be able to “gamble” on things that you normally won’t find on other derivatives exchanges.

Analyzing FTX Team

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The main faces behind FTX - image source

FTX is kind of a big deal because it’s backed by big institutions and veteran trading groups. It has a strong connection to Binance after Binance announced that they had invested an undisclosed amount of money in FTX.

But, who are the main individuals behind the exchange itself? Because, after all, we want to know whether FTX is a good investment or not. And who can help us to achieve that future if not the core team members themselves?

So, let’s start with the CEO himself. The CEO of FTX is Sam Bankman-Fried, who was basically a trader on Jane Street Capital for the international ETF division. Sam had a huge amount of experience with ETFs, forex, futures, and he was the designer behind Jane Street Capital’s OTC automated trading platform. Sam successfully graduated from MIT with a degree in physics. 

Next, we have the Chief Technology Officer, Gary Wang, who’s been with FTX since April 2019. He’s also the Chief Technology Officer at Alameda Research (the company who incubated FTX). Interestingly, Gary was the Software Engineer at Google for more than two years (from 2015 to 2017). He also used to intern as a Software Engineer at Facebook. Gary and Sam share many of the tasks together.

Besides the two main men, we also have Brian T K Lee, who serves as the VP of FTX. He’s also the Founding Partner at Blackhorse Group, a venture investment firm focusing on early-stage crypto and digital asset investment opportunities. Previously, Brian was the Co-Founder and Managing Partner at Orichal Partners, a crypto trading and advisory firm in Asia.

And then there’s Constance Wang Zhe, who acts as the Chief Operating Officer in the company. She also acts as the Head of Partnerships at Alameda Research since April 2019. Constance is kind of a big deal in crypto space; she used to be the Business Development Manager, APAC region, for Huobi. She was also an Analyst at Credit Suisse for two years.

Next, there’s also Iris (Weiyi) Xia, who acts as the Operations Analyst at FTX since October 2019. Earlier, she worked at Hacken as an Assistant to Regional BD Director. She was also the Marketing Director at Melbourne University Blockchain Association.

There are other individuals who work for FTX, but the names above already represent how strong the team is. They are great people with huge amounts of experience. 

FTX Hype And Binance Connection

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The biggest hype for FTX came after Binance officially announced that they invested an undisclosed sum in FTX. The announcement was published in December 2019. This is not just a standard “partnership” but a direct investment from the biggest crypto exchange itself. Many FTX enthusiasts felt extremely hyped by this announcement.

Just about a month after the investment announcement, Binance also announced new FTX leveraged token listings, which included BULL (3x long BTC valuation), BEAR (3x short BTC valuation), ETHBULL (3x long ETH valuation), and ETHBEAR (3x short ETH valuation). In March 2020, Binance also listed BNBBULL and BNBBEAR. These tokens’ listing successfully pumped FTX and its native token FTT’s popularity even more. 

However, on March 28th, 2020, Binance surprisingly decided to remove all FTX leveraged tokens from its exchange. The motive behind this decision was simply because of its users’ ignorance. The press release claimed that Binance traders did not really understand how FTX leveraged tokens work, and (for that reason) Binance believes the wisest decision was to simply delist these leveraged tokens.

That being said, FTT itself was still available to trade on Binance at the time this post was written. Binance does not have any plan to delist it.

Potential Roadblocks

FTX has a bright future and it keeps moving forward with promising developments. However, it does not mean it won’t have any potential roadblocks. In fact, there are some potential roadblocks that we must discuss. First of all, FTX is competing against a sea of other margin and leveraged trading platforms.

BitMex, Binance, and others also offer leveraged trading platforms to users. And even though FTX has its own unique features, it doesn’t change the fact that many margin traders might migrate elsewhere.

Another potential roadblock is the future of margin trading platforms itself. As cryptocurrencies space onboard newer traders, usually, these newer traders would prefer to learn from “all-in-one” exchanges where they can trade both spot and leveraged margin trading.

Binance and other famous exchanges offer this option for the past one-two years. FTX, on the other hand, is not really famous outside its leveraged trading option.

External Factor And FTT Price

Of course, just like any other altcoin out there, FTT price is still affected by Bitcoin price action. Yes, BTC price action is that external factor. That means, when Bitcoin has an uptrend, FTT is expected to go up. When Bitcoin has a downtrend, FTT is expected to go down.

This has been the pattern of altcoins, and FTT is no exception. So, if you decide to buy and invest in FTT, pay close attention to Bitcoin price action.

While in 2019 crypto exchange tokens like BNB and HT performed quite well compared to other altcoin trends but keep in mind that the overall price movement might still be affected by BTC price action in the future.

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The comparison between FTT/USDT and BTC/USDT, March21 - 30 (1H timeframe) - source: Tradingview

Social Stats

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According to its Telegram group, FTX is actually doing quite well. It has over 5800 members with a decent amount of user activity. I must say that FTX is doing better than many of its competitions in this particular space.

FTX also has its own Twitter account with more than 8000 followers and several user activities in each of its tweets. 

Conclusion

FTX is another crypto derivatives exchange, and it’s been doing better than most of its competitors. Its connection to Binance, its team members’ background, and its tokenized futures, all are reasons why FTX token might keep climbing the market cap ladder. FTT might be the altcoin star this year and for many years to come.

I believe FTT is a really good token to invest, considering the rising popularity of crypto derivatives exchanges. What do you guys think of FTT? Let me know in the comment section below. Also, kindly check my recently published articles here:

Is WaykiChain A Good Investment?

Is Enigma A Good Investment?

Is Loopring A Good Investment?


CryptoBoomer
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