"There are no prerequisites for a recovery." What will happen to bitcoin
Experts told what dynamics to expect from the market of digital currencies in the short term
"Any negative news will collapse the market."
BitRiver financial analyst
The second week of November reversed all the achievements of buyers since mid-September. The collapse of the crypto market occurred due to the fiasco of negotiations between the head of Binance Changpeng Zhao and the head of FTX Sam Bankman-Fried.
Changpeng Zhao caused a liquidity crisis at the FTX exchange on Monday with his announcement that he would sell FTT tokens. As it turned out, most of the assets of FTX-affiliated company Alameda ($14.6 billion) were FTT tokens.
On Tuesday, investors began actively disposing of FTT tokens and selling off crypto-assets. The market collapse lasted for two days. Changpeng tried to save a competitor through a takeover, but after becoming aware of the company's financial condition and the misuse of customer funds, it abandoned the deal.
The collapse of FTT led to the collapse of the FTX exchange. The token fell 92% in price, to $1.82. Bitcoin slipped to $15,58,000. The Cypriot regulator suspended FTX Europe's license. The Bahamas Securities Commission froze the funds of FTX Digital Markets, which was the operator of the FTX crypto exchange. The U.S. Securities and Exchange Commission (SEC) launched an investigation into Sam Bankman-Fried. He himself filed for personal bankruptcy. The FTX exchange also announced on its Twitter page (the network is blocked in Russia) that it had filed for bankruptcy.
The head of Binance destroyed the strongest competitor in a couple of days. There is an opinion that Zhao deliberately made public statements about the sale of FTT. The fire was partially contained by U.S. statistics on Thursday. Slowing inflation in the U.S. collapsed the dollar and boosted demand for risky assets. Traders sold off the U.S. currency on expectations of a slowdown in the U.S. Federal Reserve's aggressive interest rate hike cycle. The BTC/USDt pair jumped 16% to $18,200.
Although the dollar index continued to fall on Friday, the cryptocurrency stopped rising. Sam Benkman-Fried undermined confidence in the crypto industry. Investors fear the collapse of other cryptocurrencies that have had liquidity problems because of FTX. We just don't know about it yet. Alameda may be "dumping" its portfolio on the market to take advantage of the rebound.
The inflation report temporarily diverted investors' attention from FTX problems, although the market situation remains tense. After the collapse and rebound, the BTC/USDt pair is trading at $16,800 in the $15,600-$18,200 range. The shock has passed, but buyer activity is very low. Without new negative news, the continuation of the correction above $18.5k remains. In such conditions, it will be a feat for the buyers. The risks of bitcoin's decline to $12K are more than 70% by my estimates. The market is low-liquid, so any news about a crash of some other exchange with its token will collapse the market within a day. It takes a couple of weeks for the dust to settle after FTX.
"The crisis has kept bitcoin from rising."
ENCRY Foundation co-founder
All that positive impulse, which the market got after the data publication about consumption growth in the US, has been already accounted in bitcoin price that managed to restore till $18K. But the crisis around FTX, which is still in the acute phase and just started to develop, didn't let bitcoin grow and it fell below $17K again.
Next week the market will be waiting for the developments around FTX, the details of the debts of Alameda and FTX, possible solutions for the repayment of debts to clients and probably the actions of the American regulators. The latter will definitely follow, because many companies connected with the American market one way or another - Galaxy Digital and Circle - are affected.