Crypto Update: Is there a cryptopocalypse ahead?
The whole bitcoin crypto market vanished into thin air in a single instant. The cryptocurrency market appeared to be on the cusp of a comeback rally only a few days ago. In the near future, Bitcoin might very well hit $30,000. Hope was returning to the marketplace.
FTX, one of the main supports in the cryptocurrency market, has fallen. Over the past year, FTX has grown to be both one of the largest and most reputable cryptocurrency exchanges in the world. The cause of this is because insolvencies were prevalent almost everywhere during the summer, while the rest of the market was in disarray. One of the few locations that seemed to be alright was FTX.
Then, however, last week, market speculations concerning FTX’s financial issues began to circulate. All of this culminated when CZ, CEO of Binance, tweeted that he was selling all of their FTT tokens and severely disparaging FTX. This was the tweet that shocked the business community and ignited an FTX bank run. People were scurrying to get their money out. This ultimately contributed to FTX going bankrupt. Binance would sign a letter of intent to purchase and save FTX, but after reviewing their balance sheets, they determined that FTX couldn’t be saved. Binance would renege on the agreement. Which, to put it briefly, means that this will hurt the market as a whole.
This is more significant than Celsius going underground and comparable to what transpired with Luna/UST throughout the summer. In this case, many people have lost a significant amount of money that they are unlikely to ever recover. Additionally, this is a major setback for the entire sector. The trust has been broken. Unlike a typical bear cycle, where prices fall and many people lose faith in the sector.
Why does this matter for the crypto industry?
While a typical bear market lasts 12 to 18 months before prices start to rise again. This is unique. Many of the people who have been wounded by this will never return to cryptocurrency since so many people have been horribly burned and so much trust has been lost. It’s also possible that price reductions are just getting started. Given the size of FTX crypto exchange, there may be multiple cascading impacts, similar to what occurred when 3AC went bankrupt over the summer. This also might cause a number of other businesses to go bankrupt. This suggests that Bitcoin and Ethereum values may continue to decline. We must be ready for the possibility that this may be a protracted bear cycle that requires twice as long to recover. This is undoubtedly a tragic day in crypto history that will live on in memory.
Having said that, there is always a silver lining to a bad situation. Although this is a terrible scenario, many people have been harmed as a result. I really believe that the prices we are currently seeing represent “once in a lifetime” purchasing possibilities. Better than what we witnessed during the pandemonium of the summer. Better than the covid crash prices and even better than the 2018 low for Bitcoin prices. Since reaching an all-time high of $69k, Bitcoin has decreased by 77%. Ethereum’s price has decreased 77% since reaching an all-time high of $4.8k. People have lost a significant amount of money, and the market is in turmoil. It might be really challenging to keep your resolve and keep making purchases in this circumstance.
