Crypto Market Slump Continues As FTX Funds Switch Out of Ether
Effects of FTX collapse continue: It has not been a great year for crypto, and the collapse of FTX has devastated the market further. People are fleeing from exchanges, and the ongoing crisis has led to a crypto market slump. Even the largest tokens, such as Bitcoin and Ether, are not immune to the aftereffects of the FTX disaster led by Sam Bankman-Fried.
Cryptocurrencies are hurting: Bitcoin is the largest token in the world, and it is known for its stability. However, even it shed nearly 5%, hitting a low of $15,480 on Monday. That is the lowest the token has dropped since 2020, and it is not the only one having trouble during this crypto market slump. Ether also dropped significantly at around 8%, while other cryptos have seen various drops.
- Dogecoin is among those that stumbled, going down around 12% in a few days. Meanwhile, it is affecting exchanges and other crypto players, including Coinbase, which saw its stock drop to a low of $40.61 at one point.
Bankruptcies on the horizon: The situation might continue to spiral as others face bankruptcy now that FTX has fallen. Among those caught in the crypto market slump is Genesis, a digital-asset brokerage that is currently trying to secure cash to avoid filing for bankruptcy. Crypto lender BlockFi Inc. is another crypto entity that faces potential bankruptcy.
- Genesis faces a liquidity crisis and is aiming to bring in $1 billion in new capital. While there have been talks with Binance, which is currently heading a recovery fund for projects facing a liquidity crisis, funding has yet to materialize.
- The FTX bankruptcy left around $3 billion owed to top creditors, which has become a cause for worry. The massive amount of outstanding money might affect other companies and hurt the market further.
- Many have started pushing for regulations with renewed vigor in light of the crypto market slump and FTX’s devastating fall.
FTX and Ether: The crypto market slump is not the only cause for concern, especially for Ether. Not only has FTX filed for bankruptcy and become the focal point of an investigation, but it was also hacked. The hacker snatched around $660 million in assetsincluding enough Ether to make them one of the largest Ether holders in the world.
- The individual responsible for the FTX hack reportedly made away with nearly $290 million in Ether, which was apparently shifted from Ether to Bitcoin. The speculation is that the switch was done as part of an effort to turn the crypto into cash.
- Ether has underperformed Bitcoin recently, and the stolen FTX funds are likely a small part of the reason for that.
Bitcoin expectations: The fall of Bitcoin is particularly noticeable, and it is only made more obvious when compared to its high of nearly $69,000 in 2021. Now it lingers in the mid $15,000 range, and there are some who believe that it could drop much lower if chaos and blowups continue in the wake of FTX. In other words, the current crypto market slump could only be the beginning.
The future of crypto: Despite recent evidence to the contrary, many still believe in the sector overall. An example is Bill Ackman, the founder of Pershing Square Capital Management. While crypto only makes up 2% of his assets, he believes it has the ability to make a major social impact.
- Ackman did acknowledge crypto’s “ability to facilitate fraud,” but he seems to think proper oversight and regulation can make up for the negative aspects.
- Others are not as confident, questioning the future of digital assets and extending that doubt to the blockchain technology fueling it all.
The crypto market slump and general chaos are likely to extend into 2023 as the investigations into FTX continue and companies try to stay afloat in turbulent waters.
Spencer Hulse is a news desk editor at Grit Daily News. He covers startups, affiliate, viral, and marketing news.