Bloomberg: Crypto investors see more bankruptcies after FTX collapse

18 November 2022 219
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Source: Bloomberg

Authors: Sunil Jagtiani and Akshay Chinchalkar

ArticleOriginal article

Publication date: Friday, November 18, 2022

 

Crypto investors are concerned that more companies will go bankrupt after the collapse of Sam Bankman-Fried’s FTX. Despite these fears, bitcoin has seen a growth at the end of the trading week.

 

John Toro, head of trading at digital-asset exchange Independent Reserve, highlighted that market participants were trying to figure out why cryptocurrency markets had been resilient despite recent events. According to him, the counterparty risk is likely to show up in the markets in a couple of months.

 

Other players of the cryptocurrency ecosystem also say that investors should take a cautious approach. For example, part of the Bitcoin futures curve is in backwardation, meaning its spot price is higher than its futures price. This signal can be seen as a bet on the decline of Bitcoin. The Bitcoin volatility index that measures the expected volatility of the digital asset also climbed.

 

A team of JPMorgan Chase & Co. strategists led by Nikolaos Panigirtzoglou estimated the outflow of $25 billion from crypto market since May.

 

Speaking in an online video presentation, Chris Weston, head of research at Pepperstone Group Ltd. alongside Blake Morrow, co-founder of ForexAnalytix, noted that it was unclear why Bitcoin had stayed relatively stable.

According to Blake Morrow' s estimates, the cryptocurrency will decline to between $5,000 and $10,000 before it bottoms out.

 

Forecast:

Bitcoin will continue to decline in the medium term

This content is for informational purposes only and is not intended to be investing advice.

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