When investors put money on an exchange, they shouldn’t have to worry if it’ll vanish tomorrow. Their only worry should be the price of their Bitcoin, Ethereum or other cryptocurrency investments.
As much as we don’t want overregulation, the crypto industry needs a transparent framework.
More Crypto Companies Could Go Bankrupt In FTX’s Wake
FTX owes nearly $3.1 billion to its top 50 creditors, and much more beyond that. While there is still a chance that more companies will go bankrupt due to the FTX collapse, it will likely have been the biggest among them to go under. A lot of smaller ancillary companies with investments in FTX might go under next. We’ve already started to see some of that play out.
For instance, Genesis Global Capital, a subsidiary of Barry Silbert’s crypto empire Digital Currency Group, suspended customer withdrawals after the FTX failure. As you can imagine, this only served to spook the crypto markets further.
As reported by Cointelegraph, Genesis Global had $175 million worth of funds on FTX. Digital Currency Group, the parent company of Genesis Global, quickly infused its subsidiary with $ 140 million worth of emergency equity to cover losses.
FTX Could Be The Beginning Of The End For Crypto’s Bear Market
In the two years following the 2017 big bull run — Bitcoin fell to $3,500, and the sentiment was that Bitcoin was done and crypto over. That’s the sentiment when the price approaches the bottom. While we’re not at a bottom yet — Bitcoin is going to go down further still—this is the beginning of the last flush down to the $9,000 to $10,000 range. This bottom, combined with regulations likely to come in 2023, will draw big money back into the industry.
FTX has been compared to both Enron and Lehman Brothers. When Lehman Brothers went bankrupt during the 2008 financial crisis, it shook the investment world. But, ultimately, it was the beginning and end of that crisis. The market flushed out for approximately six more months before putting in an epic bottom in the first quarter of 2009. From that bottom, we went up…