Bitcoin continues to lose ground in the cryptocurrency market, still reeling from the failure of FTX. In just over a week, the leading digital currency has lost around 20% of its value from a price of $21,000. A series of tragic financial events in 2022 helped plunge the price, which just a year ago had reached an all-time high of $69,000. Investors thought that with the implosion of the TerraUSD stablecoin and the bankruptcies of crypto firms Celsius, Digital Voyager, and Three Arrows Capital, they had seen and taken enough.
Instead, what happened was just one part of a larger catastrophe, now serving as the Sam Bankman-Fried FTX debacle, which was supposed to save the industry just weeks ago. Concerns are now about the ripple effect that bankruptcy of the exchange could have, with exposed companies like BlockFi one step away from filing for Chapter 11 bankruptcy in the US. Just BlockFi had been bailed out by FTX with a loan of 250 million dollars, but since last week it has been blocking the withdrawals of its clients.
Bitcoin: reasons to invest
In a very tense climate, is it conceivable to invest in Bitcoin by buying at low prices? A major investor has already bet on cryptocurrencies, although not directly. This is Cathie Wood, manager of Ark Investment Management, who took advantage of the collapse of the Grayscale Bitcoin Trust, a fund that tracks the price of virtual currency, to buy more than 315,000 shares for $2.8 million.. In fact, last week it was recorded the largest inflow of funds into digital asset investment products in the last three months according to CoinShares data. However, it must be said that this essentially occurred in the days before the FTX default. “Many Bitcoin whales have chosen this moment of panic to accumulate, as the number of addresses containing more than 10,000 Bitcoins has skyrocketed in the past week,” said Marcus Sotitriou, an analyst at digital asset broker GlobalBlock.
The point now is to understand if risking at this moment is worth it. According to Naeem Aslam, an analyst at AvaTrade broker, “The cryptocurrency world is still rocked by FTX and traders are still in shock. However, facts like FTX only help weed more bad people out of the system.” The expert emphasizes the fundamentals that traders need to pay attention to and “the fundamentals will get better,” he noted. A key role could be played by traders. institutional investors who, in his opinion, “may delay their participation” pending an intervention by regulatory authorities.However, Aslam believes that “many would be enthusiastic about the current pricing situation and the opportunities it offers.”