On Wednesday, Bitcoin reached a two-week high of about $17,000, but analysts claimed the effects of FTX’s meltdown have not yet fully emerged.
Despite constant negative headlines in the industry, bitcoin and Ethereum have increased in value over the past week by 2.76% and 8.90%, respectively, according to Messari.
FTX, Sam Bankman Fried’s-once $32 billion digital asset empire, abruptly collapsed earlier this month, sparking concerns about contagion. BlockFi, a cryptocurrency lender, filed for Chapter 11 bankruptcy on Monday, indicating considerable exposure to FTX. According to the report, industry leader Genesis is coordinating restructuring attorneys to keep the crypto brokerage from going bankrupt.
The crypto business has lost two-thirds of its worth since November 2021, and despite the current price increase, the blows aren’t over.
He predicts brief phases of excitement that result in significant [and] fast rallies, but he still see crypto-specific headwinds as well as standard market headwinds, said Caleb Franzen, creator of research firm and newsletter Cubic Analytics.
He highlighted that even if the Fed delays its rate hikes, financial conditions remain tight. Furthermore, the drop in liquidity will continue to expose overleveraged enterprises, rogue actors, and ‘naked swimmers, he said.
Franzen sees challenges for asset prices across the board, with bitcoin looking particularly vulnerable given the recent contagion incidents.
Bitcoin may have reached a short-term low, according to Yaroslav Shakula, CEO of venture capital firm YARD Hub, because it withstood the BlockFi announcement earlier this week.
However, this upward correction may yet give way to the continuance of the bearish trend if the FTX-caused domino effect ends up hitting some other significant crypto exchanges or funds, Shakula warns.
Furthermore, Bitcoin.com CEO Dennis Jarvis cautioned that just because the sector doesn’t have any additional bankruptcy filings does not indicate the contagion has ended.
For instance, Genesis has suffered a $175 million loss due to FTX. Even if it survives this storm, he claimed, customers like Gemini are under pressure from financial constraints, forcing it to halt its Earn lending program. Since everyone is on edge, even the slightest hint of conflict might quickly escalate.
Przemysaw Kral, CEO of cryptocurrency exchange Zonda Global, claimed that the FTX disaster has reached its conclusion because the token has barely decreased in value despite the barrage of negative headlines.
Additionally, Kral noted that it had been more than a year since Bitcoin’s previous all-time high, which historically had always been a reliable sign of the bottom – in both 2015 and 2018. However, some think that a decline to about $13,800 (80% from ATH) would provide real evidence that the bottom has been reached.
