Bitcoin as well as Ethereum rates have steadied given that the collapse of FTX – however will cryptocurrency financiers remain to hold company?
- The collapse people exchange FTX will certainly have a considerable influence on crypto
- Bitcoin as well as Ethereum have actually held reasonably solid today in spite of the information
- Investors are holding their possessions in the meantime, according to eToro information
- We check out where the leading cryptocurrencies can go from below
Leading cryptocurrencies have staged a small comeback in recent days despite the collapse of major exchange FTX.
News of FTX’s bankruptcy last week sent shockwaves through the crypto industry and beyond.
But cryptocurrencies have already entered into a bear market, meaning prices have been depressed for some time.
Sink or swim? Bitcoin and Ethereum have tread water since FTX’s collapse last week but the
Given the scale of FTX’s collapse and the possible ramifications on the rest of the crypto industry, Bitcoin has held up well.
The world’s biggest and most well-known cryptocurrency gained nearly 2 per cent on Tuesday to near the $17,000 mark, after dropping to below $16,000 following the news of the FTX bankruptcy.
It fell back 2 per cent on Wednesday to settle at around $16,500 as it emerged crypto exchange Gemini had halted withdrawals.
While Bitcoin has shed less than some might have expected – around 4 per cent in the past five days – its value has plummeted from its peak of $67,500 this time last year.
Ethereum crashed to $960 in the wake of FTX’s collapse but is now trading at $1,017. Like Bitcoin its value has plummeted since last November, when it peaked above $3,000.
AJ Bell’s investment director Russ Mould said: ‘FTX’s implosion will be a particular test of faith for crypto enthusiasts and, under the circumstances, you could argue that Bitcoin is helding up relatively well at just shy of $17,000 given the torrent of bad news.
‘The question now is whether there are further shocks and scandals to follow.’
Crypto investors seem to be holding their investments for now, with eToro data showing a small increase in the total number of global users of the investment platform holding Bitcoin and Ethereum in the past week.
In terms of the average crypto holding, there has been little change in that time.
‘Confidence will always be impacted in these circumstances but from our client base, we can see there has not been panic,’ said Simon Peters, crypto consultant at eToro.
‘Users continue to hold onto their cryptoassets waiting for the market to pick up momentum.’
Crypto investors might be tempted to think the worst is over but the fallout could last for some time. In its bankruptcy filing this week it was revealed FTX could have up to a million creditors who will be scrambling to recover funds.
‘Events like this always have a negative impact on the crypto market as a whole and in the short term, there has already been an impact on the prices of major coins,’ says Peters.
‘Longer term, I believe that the development of sensible, balanced regulation that keeps large crypto players operating on shore will prevent events like the one we saw last week from happening.’
Wider economic factors could also play a big role if the Federal Reserve and other central banks continue to tighten monetary policy.
‘As interest rates rise, and Quantitative Easing is being (slowly) withdrawn, the cost of money and returns on cash are going up. This may tempt investors to treat money with more reverence and take less risk,’ says Mould.
‘There could be more bad news to come, especially if central banks stay the course, and keep hiking rates, to take away at least a chunk of the cheap liquidity that did so much to fuel interest in crypto in the first place.’