November began with the bankruptcy of FTX, one of the largest digital currency exchange platforms in the world. Days later the 'exchange' Blokfi also declared bankruptcy. With news that a third, Genesis, is suffering from liquidity problems and rumors that Digital Currency Group's Grayscale fund could be affected by the FTX collapse, fears of a 'cryptocrash' are starting to spread.
The crypto community is increasingly nervous about the possibility that the chain fall of several of the big players in the digital currency market could precipitate the value of bitcoin to $ 12,000, 'the largest cycle reversal ever seen.'
The fall of Blokfi is directly linked to the collapse of FTX. As Toribio explains, 'these types of companies are financial, very similar to entities that grant loans for investment. When FTX goes bankrupt it has debts with other corporations of similar activity, many become insolvent'.
¿Current context for investors in bitcoin?
First of all, they need to fully understand the risk they are assuming and assess what they demand in return. I don't mind investing in a bank that is going to fail if the return is worth it, if the risk/return ratio is worth it. The second thing is to do your own analysis, since there are not many specialized companies, and assess the 'exchanges': consult the balance sheets made public these days to understand which ones are more or less solvent. But the important thing is not to use only the most solvent, but to understand that the least solvent must offer us a much higher interest rate in return. Then it is the responsibility of each investor to decide what amount of money he deposits in each of them, including the option of none.
¿Bitcoin's unprecedented retracement?
One of the feared effects of the earthquake with its epicenter in FTX could be that bitcoin precipitates its value to $12,000, making 'the setback in this cycle greater than ever seen.
Professor Pablo Sanz recalls that bitcoin is the most paradigmatic cryptoactive, the original and the main reserve asset. A year ago, in November 2021, its value was around $57,000, with the crisis experienced by crypto assets in the spring, it plunged to around $20,000 in June. And now it's dropping to 15,000'. Sanz recalls that, although the biggest setback in four years is feared, the bubble started in March 2020, coinciding with the pandemic, when its value was $6,000.
¿What is FTX?
FTX, one of the world's largest cryptocurrency platforms with an estimated value of $32 billion, collapsed within days amid doubts about its solvency, prompting many users to rush to withdraw their money, leaving it without liquidity and looking for a ransom. The capital injection never came and FTX ended up declaring bankruptcy. He had used billions of dollars from his clients to finance risky bets.
¿Is the cryptocurrency market down?
Media specialized in cryptocurrencies report falling prices. In recent days, the global cryptocurrency market capitalization would have fallen by more than 2% and now stands at around $857 billion. The ten largest cryptocurrencies by market capitalization are trading in the red this week. Bitcoin and Ether were down 2% and 3.37% to trade at $16,220 and $1,170 on Monday. All because the cryptocurrency market is anticipating that an FTX ripple effect could be on the way.