Bitcoin extends gains as investors await details on recovery fund
(Bloomberg) — Cryptocurrencies shot higher on Tuesday as investors awaited more details on an industry recovery fund promised by Binance Holdings Ltd. CEO Changpeng ‘CZ’ Zhao.
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Bitcoin, the largest token, climbed toward $17,000 with a gain of around 2%, while second-ranked Ether added a similar percentage as of 13:20 in Hong Kong. The moves provided respite after a damaging sell-off triggered by the bankruptcy of Sam Bankman-Fried’s FTX exchange.
Digital assets associated with his now-fallen empire, such as Solana and Serum, stabilized. So did Cronos, the original coin of Crypto.com, whose platform is under scrutiny for signs of stress as the sector rolls out of the FTX rout.
Billionaire Zhao, operator of the world’s largest crypto exchange, announced the plan for the fund on Monday and said more details would follow. It helped stabilize sentiment on speculation the move could stem contagion after a $200 billion drop in the value of digital assets since FTX first began to falter.
Meanwhile, an Elon Musk tweet that Bitcoin “will make it” also saved the mood. Dogecoin, a token Tesla’s CEO has highlighted in the past, ended up for a third day.
While markets have benefited from Zhao’s move, such a fund may not be best for the industry, Quantum Economics CEO Mati Greenspan said. Binance already has too much control in a decentralized market, he said.
“That kind of concentration of power makes me uncomfortable,” Greenspan said. “That’s the kind of thing crypto was designed to avoid, and one of the lessons we should have learned from last week.”
Some of the first court documents to hit FTX’s bankruptcy filing showed the collapse could involve more than one million creditors, illustrating the reach of Bankman-Fried’s operations before it quickly unraveled.
Derivatives markets highlight ongoing concerns about the outlook. The Bitcoin futures curve shows that the token’s spot price is higher than the futures price – an inversion that suggests betting that the digital asset will continue to fall.
Caroline Pham of the US Commodity Futures Trading Commission said the crypto sector suffers from poor risk management.
“It’s hard to see where the contagion can stop,” Pham told Bloomberg TV. “More news will come out as people continue to work through their exposures.”
–With assistance from Akshay Chinchalkar and Carly Wanna.
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