The fallout of failing cryptocurrency exchange FTX could result in Bitcoin plummeting to as low as $13,000.
Key Details
- Investors in cryptocurrency are still scrambling to recover from the largest global exchange, Binance, backing out of plans to acquire cryptocurrency exchange FTX.
- After due-diligence research uncovered concerns about FTX’s handling of customer finances, concerns are on the rise that FTX could face bankruptcy.
- Strategists are estimating Bitcoins potential fall by its overall production costs—the electricity needed to operate the computers that control the Bitcoin network.
Why it’s news
Judging by operating costs, some experts are predicting that Bitcoin can only fall to $13,000, though there are some arguments that the floor could be lower than that.
Bitcoin ended four days of declines, including a fall of more than 15% Wednesday, to reach $17,300 midday Thursday.
Currently, FTX is still looking at potential bankruptcy. FTX founder Sam Bankman-Fried has told investors that the company is in need of a cash injection in order to avoid bankruptcy, Bloomberg reports.
This is the latest hit to the crypto market, following troubles in May when crypto currencies TerraUSD and Luna crashed.
Notable quotes
“What makes this new phase of crypto deleveraging induced by the apparent collapse of Alameda Research and FTX more problematic is that the number of entities with stronger balance sheets able to rescue those with low capital and high leverage is shrinking,” said J.P. Morgan strategist Nikolaos Panigirtzoglou.
