FTX’s Fall Will Extend Cryptocurrency Bear Market – Here’s Why
We are enduring a crypto winter, and FTX’s turmoil means such narratives may persist.
The crypto space has felt the shockwave of exchange FTX’s bankruptcy. The recent debacle of a renowned cryptocurrency firm remains a big deal in the marketplace. FTX’s turmoil has impacted crypto investors and users, while exchanges remain under pressure to ensure heightened transparency and accountability as they fight to retain investor faith.
Market players had predicted an imminent BTC bottom and trend reversals before the FTX fall. Nevertheless, the exchange’s bankruptcy annulled expectations of potential market revivals, and the bearish market may last than anticipated. Here’s why investors/traders can expect extended downsides in the broad market.
FTX Bankruptcy Deteriorates Investor Confidence
Multiple reports show several leading cryptocurrency firms held cash in the now-insolvent FTX exchange. And that makes them susceptible to bankruptcy. Genesis Trading is among the companies that saw their cryptocurrency funds stuck.
November 11 Bloomberg reports show the lending firm had $175M in FTX. Also, Crypto.com is among the most hit. Nevertheless, Crypto.com exec Kris Marszalek confirmed the platform’s FTX exposure is beneath $10M, canceling speculations of financial woes.
CNBC reports show Multicoin Capital lost million following FTX’s bankruptcy. Furthermore, BlockFi, which had substantial FTX exposure, bore a massive hit. Though unclear how much it lost, BlockFi has suspended withdrawals and might file for insolvency.
These represent some of the multiple affected institutions. Such developments will likely push dip-pocketed investors to consider deals and investments in more stable industries and assets. Thus, many will trim the cash allocated to crypto firms for a while.
Dampened Market Sentiment
Retail faith has met a massive setback, and crypto exchanges saw withdrawal requests increasing following the FTX announcement. Investors resorted to withdrawals as many individuals thought the market would crash.
Moreover, crypto exchanges see increased distrust. What can the market spare if leading crypto exchanges such as FTX can crash? The increasing negative sentiment in the market also confirms the continued crypto prices fall.
For instance, Bitcoin touched 2-year lows on November 21, trading at $15,480. Altcoins also suffered bearishness. For example, Solana welcomed November hovering at $38 before plunging to $11 before the month ended.
Negative market sentiment has sent many digital assets down by massive margins. Furthermore, no one can tell when the price fall will stop.
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