Bitcoin price has dumped 23% since the FTX collapse. What now?
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The Bitcoin (CRYPTO: BTC) price has taken a dive since the collapse of Sam Bankman-Fried’s crypto exchange FTX.com and its related trading company Alemada Research.
This came after news emerged that FTX was partially backed by its own utility token, The FTX token (CRYPTO: FTT), instead of good old fashioned fiat currency. The resulting large drop in FTT value quickly led to a major liquidity crisis for FTX and sent the crypto markets into a tailspin.
On November 6, BTC traded at $21,162. At the time of writing, the Bitcoin price is at USD 16,382. That’s down 23% since FTX ran into trouble and down 66% in 2022.
With that in mind, what can crypto investors expect next?
What could be next for the Bitcoin price?
The FTX meltdown could provide some sustained headwinds for Bitcoin.
That’s according to analysts at JPMorgan, who predicted that the Bitcoin price could slide all the way to $13,000 on the back of these new uncertainties.
According to the analysts (courtesy of Forbes):
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 capable of rescuing those with low capital and high leverage is shrinking within the crypto ecosystem…
Given the size and interconnections of both FTX and Alameda Research with other entities in the crypto ecosystem, including DeFi platforms, it appears that a new cascade of margin calls, deleveraging and crypto company/platform failures is beginning in the same way we saw last May . /June after the collapse of terra.
Hani Redha, a multi-asset portfolio manager at Pinebridge Investments, also doesn’t think the Bitcoin price will get any reprieve from institutional investors this time around.
“What has become clear is that it will not find a home in institutional asset allocation,” Redha said (quoted by Bloomberg).
“There was a period when it was considered a potential asset class that every investor should have in their strategic asset allocation, and that’s completely off the table.”
However, not all experts are equally bearish on the outlook for the Bitcoin price.
Akeel Qureshi, core contributor to the Hubble Protocol and Kamino Finance on the Solana blockchain, believes a recovery is on the horizon.
Qureshi said (quoted by Forbes), “The market takes a hit, but crypto’s volatility has historically led to shakeouts that ultimately strengthen the space in the long run.”
Remember, whatever your own outlook for the Bitcoin price, never invest more than you can afford to lose.
