Better-than-expected US inflation should have lifted Bitcoin. Here’s what happen
Kunji expert explains that lately, the markets across the board have shown bullish movement whenever the actual rate has been lesser or equal to expectation and vice versa. While equities(S&P), Energy(SPN), and BTC showed a good correlation, GOLD persistently showed deviation from the group trend.
The slowdown in US inflation data for October month was better-than-expected which shifted the gear in crypto markets for a brief moment. Everything looked rosy and optimistic, Bitcoin surged by around 4%, and Ethereum along with other cryptos too picked up on the day when inflation data was announced. But then came Friday, and the scenario changed drastically as cryptocurrencies are in a bloodbath currently. Bitcoin which is the largest crypto has erased its $17,000 mark. So far this year, past trends showed a correlation between Bitcoin's performance with US inflation data. The latest print of the US consumer price index should have led to an upside for Bitcoin, however, that is not the case. Why? The answer is the crypto exchange FTX.
Further, in the statement, FTX said that "many employees of the FTX Group in various countries are expected to continue with the FTX Group and assist Ray and independent professionals in operations during the Chapter II proceedings."
Subsidiaries of FTX Group that are not included in Chapter 11 proceedings are --- Ledger LLC, FTX Digital Markets, FTX Australia, and FTX Express Pay.
It feels like deja vu. The crypto markets are not seeing a situation like FTX for the first time. Just like FTX, leading crypto exchanges Celsius and Voyager Digital are under an insolvency process.
FTX's sister token FTT has nosedived by around 50% at its worst in a single day --- which is enough to remind the flash-crash of Terra sister tokens USD and LUNA that took place in May this year.
FTX crisis is likely to put impact investors' trust in cryptocurrencies. Billions of dollars of wealth have come under pressure in this market.
At present, FTX-backed token FTT traded around $2.7 -- nosediving by over 23.5%. Millions of dollars of the market cap of FTT have been wiped and are currently near $363.58 million. Its weekly drop on CoinMarketCap is more than 89%, while its monthly downfall is over 88%.
In Aggarwal's view, being one of the most widely connected firms across the Trading ecosystem, private crypto equity, sports arenas, and whatnot, FTX’s plunge will surely create havoc for crypto markets in the coming months.
"Even though a final leg up is hugely probable for the broad markets, structural changes in the crypto ecosystem and much stricter regulations should be expected after this episode," he added.
Founded in 2019, FTX is headquartered in The Bahamas. As of February 2022, the exchange had over 1 million users.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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