The collapse of FTX, one of the biggest cryptocurrency “exchanges”, caused the prices of all assets to plummet.
-19% for Bitcoin, -24% for Ether, -39% for Dogecoin and -24% for Avax. The cryptocurrency market is rocked this week by the collapse of FTX, one of the biggest exchanges on the planet. For those who do not know the jargon, exchanges are online platforms similar to online banks, which allow you to exchange assets (euros against Bitcoin and other cryptocurrencies) and store them in your account.
FTX was one of the big names in the industry, alongside Binance, Coinbase or Crypto.com. Recently, however, the company has come under pressure from its rival, Binance, which decided to resell all cryptocurrency assets from its rival platform. The delisting of the token caused its rating to plunge on the market. -75% in a few hours. The company has, in a panic, frozen withdrawals for all its users and resold some assets to prevent its token from collapsing. Binance then offered a bailout of its rival. According Bloomberg, FTX, however, would be in deficit to the tune of six billion dollars and its finances would be so bad that any takeover would be practically impossible. The company, born in 2019 in Hong Kong, had relocated to the Bahamas. It had crossed $1 billion in revenue in 2021 and had become one of the major players in the market. Sam Bankman-Fried’s company, however, was on the radar of the Securities and Exchange commission (SEC) for several weeks, for questionable practices. Remember that if these companies brew billions, today there is still no framework governing their activities.
For now, it is difficult to know what fate will be reserved for the platform. If no rescue is organized, his death could have an impact comparable to the sinking of a large bank, like Morgan-Chase. The cryptocurrency market had already suffered several crashes this year. The collapse of FTX could cause the market to plunge further. Some analysts are already predicting Bitcoin at 13,000 euros. At the time of writing these lines, Bitcoin is trading at €16,2000.
In the event of another fall, Bitcoin would drag all other assets with it. The dominance of Bitcoin remains very strong in the sector. The slightest fluctuation in its price affects the value of other assets. And until the FTX matter is settled, there is likely to be uncertainty in the markets. Will we soon see a Bitcoin at €10,000 again? One thing is certain, it will take a long time for the asset to recover to the level it reached at its peak, in December 2021.
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