The CEO of FTX, one of the world’s largest crypto exchanges, said the most damaging part of the ongoing cryptocurrency turbulence that sent tokens plunging and triggered the downfall of a number of major companies, has likely passed.
In recent weeks, FTX big boss Sam Bankman-Fried has become crypto’s lifeline, supplying badly needed funding to crypto companies that have collapsed as cryptocurrency prices have crumbled.
As of this writing, Bitcoin (BTC) is trading at $20,535, up 2.1% in the last seven days. The crypto has lost around 70% of its value, after registering an all-time high of $69,000 in November last year.
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A Disaster Year For Crypto
The drop in cryptocurrency prices may have reached its bottom, as prices have balanced, but it will mostly hinge on the macroeconomic environment, according to Bankman-Fried, who is from California but resides in the Bahamas, where FTX is headquartered.
This year has been a disaster for crypto investors. The market capitalization of these digital assets has fallen below $1 trillion, and the prices of nearly every cryptocurrency have fallen by more than half from their all-time peaks, with no fast rebound in sight in the face of the ongoing crypto winter.
Image: CryptoHubK
In the most literal sense, crypto winter occurs when prices decline and remain low for an extended period of time. Earlier this year, according to market experts, the wheels of the forthcoming crypto winter were set in action.
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“I don’t think it’s an existential threat to the industry,” the 30-year old crypto billionaire, a 2014 graduate of the Massachusetts Institute of Technology, said in quotes by Reuters. “However, I believe it is a fair bit worse than I anticipated,” he continued, referring to the drop in Bitcoin prices.
According to Sharat Chandra, vice president of Research and Strategy at blockchain-based identity management platform EarthID, “crypto winter chills” have compelled even Bitcoin miners to liquidate their assets.
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Crypto total market cap at $900 billion on the daily chart | Source: TradingView.com
Investors have fled the crypto markets as the U.S. Federal Reserve aggressively raised interest rates to contain hyperinflation. There will be continued market volatility, and sell-offs cannot be ruled out, analysts say.
Meanwhile, Bankman-Fried, who has already provided hundreds of millions of dollars in credit lines and has been the subject of buyout speculations, told Reuters that his company still has “a few billion” to shore up other crypto companies in financial distress.
Bankman-Fried asserts that bailouts and financial aid are essential for the health and sustainability of the crypto sector as a whole.
“It does get increasingly expensive with each one of these,” according to the billionaire, adding that FTX still had a substantial amount of money in its coffers to do a $2 billion deal, if the situation calls for it.
Featured image from Finews Asia, chart from TradingView.com