The market is currently suffering for a second time following the LUNA’s downfall and subsequent misfortune of the companies attached the cryptocurrency.. The sudden bankruptcy of FTX crypto exchange initiated a domino effect across the entire crypto world. Everybody involved has suffered, starting from large crypto funds, such as, Galaxy Digital and Paradigm, to ordinary clients of the exchange. The latter tried to withdraw their funds in every way possible, including via TRX tokens, whose prices sky-rocketed above $2 within FTX, while trading at $0.5 on other exchanges.
Binance, the largest cryptocurrency exchange in the world in terms of daily trading volume, has published its assets structure saying it has enough funds to continue its operations without any hurdles. The exchange said it has $40 billion in stablecoins, $8 billion in BTC, $6 billion in Ethereum, and $19 billion in its own Binance coin. Tether also said it is not related to FTX or its sister Alameda Research, reassuring markets that 100% of USDT is backed by a conservative portfolio including cash and U.S. Treasuries.
So far only $8.8 billion of FTX debt is considered delinquent, but the situation could be far worse. Zane Tackett, former FTX Head of Institutional Sales, who resigned after the exchange went bankrupt, said the bankruptcy was not the only way out. A token that could be linked to this delinquent debt could be issued to deliver long-term redemption of the debt, including interest. But this is not what investors have been looking for as a means to fund this seemingly perspective project. However, they have no choice now. The situation may become even worse after a FTX wallet hack for $380 million.
The major conclusion of all these stories is that the crypto market is an unsafe place for everybody. Galois Capital, the fund that predicted the LUNA crash, has lost about 50% of its assets or around $100 million with FTX. Large crypto funds may continue to put on a poker face to cover up the gravity of this situation, but sooner or later they will have to confess to their losses. All this would keep many large financial institutions away from the crypto market and may set on pause on a vast amount of crypto operations. And it is not only about large funds, but also about market players. This may increase arbitrage opportunities among various crypto exchanges. This pause may last for a long time, until national regulators take over control of the crypto market infrastructure.
The forecast for BTC prices is intact as they are expected to slide towards $15,400 per coin soon and continue down to $8,000-10,000 in the mid-term. The next rally in the crypto market may only begin in the second half of 2023. The next BTC halving is scheduled for May 2024, and this may be the time the market could be aiming for in terms of boosting prices up.