FTX bankruptcy halts crypto rally as Bitcoin slips to $16,700
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(Kitco News) – Yesterday’s crypto market pullback is increasingly looking like a “bull trap” as widespread weakness returned on Friday after cryptocurrency exchange FTX – which was the main source of market turmoil this week – filed for Chapter 11 bankruptcy.
Investors are now digging to find out which firms are likely to be most affected by FTX’s fall, and with the data showing that their ties are quite extensive, the possibility of a longer decline is looking more likely by the hour.
Data from TradingView shows Bitcoin (BTC) held close to support at $17,500 before the FTX bankruptcy announcement, but plunged to a daily low of $16,260 when the news broke. At the time of writing, bulls have managed to bid it back above $16,800 where they are now battling with bears for control of the price action.
BTC/USD 4-hour chart. Source: TradingView
The weakness was spotted early by Kitco senior technical analyst Jim Wyckoff, who noted that “bulls continue to struggle to stabilize a still shaky market that saw BC prices this week plunge to a near two-year low.”
As it stands now, “bears have the solid near-term technical advantage to suggest even more downside price pressure in the near term,” Wycoff concluded.
A survey of popular analysts on Twitter confirmed this outlook, with the vast majority viewing FTX’s bankruptcy filing as a sign that the market is headed for a longer downturn.
ONE #BTC Bull Market will take place one day
But today is not that day$BTC #Crypto #Bitcoin
— Rekt Capital (@rektcapital) 11 November 2022
The other big takeaway is that the crypto industry really needs to put regulations in place that can help protect investors after the second major contagion event in 2022.
“This week’s FTX crisis underscores the urgent need for robust crypto regulation internationally,” said Damian Scavo, CEO and founder of Streetbeat, adding “Retroactive litigation does nothing to protect consumers or the market, and a lack of regulatory clarity can drive investors offshore. .”
“Government bodies in the US, and globally, need to create standards for a centralized crypto exchange and fund committees for regulation to ensure that consumer assets are protected,” Scavo said. “As many people, including Streetbeat, have warned, a crisis like this could have been avoided by regulating the listing of assets on exchanges.”
Stocks up, crypto down
Traditional financial markets were largely able to brush off Friday’s FTX performance and post positive gains for the day. At the end of the markets, the S&P, Dow and Nasdaq finished in the green, up 0.92%, 0.10% and 1.88% respectively.
The same cannot be said for the altcoin market as most tokens resumed their downtrend on Friday.
Daily performance in the cryptocurrency market. Source: Coin360
As usual, a few tokens managed to move against the pack and post positive gains for the day, including a 10.93% gain for dYdX (DYDX), a 10.71% gain for MX Token (MX) and an 8.13% gain for Aragon (ANT) ).
The total cryptocurrency market cap is now $848 billion, and Bitcoin’s dominance rate is 37.9%.
Disclaimer: The views expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept responsibility for any loss and/or damage arising from the use of this publication.
