Venture Capital Firm Predicts That The FTX Contagion Will Continue To Plague The Industry For Several Weeks
Leading crypto startup firm, Multicoin Capital, has published its forecast for the upcoming weeks in a message to its shareholders. The firm’s operating partners, Tushar Jain and Kyle Samani, argue that the FTX debacle does not portend the end of the cryptocurrency sector.
The venture capital company asserted that FTX would not be the demise of the cryptocurrency industry. They explained that the collapse of Lehman Brothers and Enron wasn’t the end of the banking and energy sectors, respectively.
The company also informs its stakeholders that FTX’s failure will have additional consequences. For example, Tushar and Samani wrote: In the coming weeks, the effects of the FTX and Alameda pandemic are anticipated.
They added that the demise and closure of numerous trading firms would stress volume and liquidity across the entire cryptocurrency ecosystem. They further predicted there wouldn’t be any “signs of growth next year” until leverage is eliminated from the system.
Multicoin Had Confidence In FTX
Nevertheless, Samani’s business admitted to its errors, saying it placed too much confidence in FTX. Therefore, Multicoin suffered a loss of 15.6% in its FTX investments.
The startup could recover only around 25% of the money it invested in the exchange. As a result, the corporation anticipates writing down its investment in FTX to zero while waiting to see how the bankruptcy procedures develop.
Multicoin thus suffers the same doom as several other FTX backers like Sequoia Capital, Temasek, and Softbank. Multicoin said that it is exclusively trading on Binance and Coinbase because of its decline in confidence.
Nonetheless, the firm stated that it currently solely uses cold wallets that it manages by itself and Coinbase custody. Multicoin also made significant investments in Solana. SOL and FTT were among FTX’s most important investments, making SOL one of the greatest losers in the FTX crash.
Based on its letter to its backers, Multicoin still believes in SOL’s long-term viability despite the significant losses. The venture capital firm claimed that Solana has “one of the most dependable development crypto ecosystems.
Hence, it would maintain its investment as it still believes that crypto has a promising future.
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