In the deep valley

28.11.2022 – After the FTX debacle, the entire crypto industry is being shaken up. But will we soon see a resurgence after the crash? We let experts have their say.

The daily chart of BTCUSD currently looks rather depressing from the bulls’ point of view. But what will happen next?

 

Source: Bernstein Bank GmbH

Kenneth Rogoff, former chief economist at the International Monetary Fund and now a professor at Harvard, just judged that the collapse of Sam Bankman-Fried’s $32 billion crypto empire FTX will go down in history as one of the greatest financial debacles.

Not the last scandal
The loss of confidence will, of course, result in a continued plunge in the price of the underlying, especially if regulators now turn their attention to the various exchanges in a more stringent manner. However, a price adjustment is not the end of the world. The most likely case would be better regulation of centralized trading venues. Which, in turn, could restore confidence and result in higher crypto prices. Still, the bottom line for Rogoff is that FTX won’t be the last scandal.

“Bitcoin is not going away”
Star investor Mike Novogratz spread hope on CNBC: “We certainly do have a crisis of confidence in the industry and we’re not out of the woods yet. FTX was a major player so it’s going to take a few weeks for people to even get their balance back. Bitcoin’s not going away.” However, he predicted a long, rocky road ahead for the market, saying, “I don’t think it’s going to be a ‘V’ recovery, it’s going to be a grind out of gaining trust.”

“There will be pain”
Meanwhile, Binance CEO Changpeng “CZ” Zhao gave details of his planned crypto rescue fund. He said he wants to raise at least $1 billion, and the fund could also grow to $2 billion; its mission: “to help projects who are otherwise strong, but in a liquidity crisis.” And further, he explained recently on the sidelines of Abu Dhabi Finance Week, “There are still players with very strong financials and we should band together to try to help the projects in need, especially if it’s only financial need.” And to Bloomberg, CZ said, “There will be pain whenever one player goes down.”
Our conclusion from all this: apparently, key industry figures see a possible learning effect and a restoration of confidence if workable regulation is put in place. But the way out of the deep valley is likely to take time. We are curious to see what happens next – and wish you successful trades and investments!

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.