The collapse of FTX and the failure of the rescue of Binance highlight again the multiple challenges facing criptomonedas with the governance and the failure of decentralized systems.
Bitcoin and other criptomonedas collapsed in the last days when fear gripped the market of this type of assets in the wake of the liquidity crisis in the FTX, one of the bigger platforms in the world. The price of the digital asset reference has come to fall up to 25% since the end of last week, marking lows below $ 16,000, which is its lowest level since November of 2020.
“We have days of nerves ahead for the criptomonedas,” says Craig Erlam, analyst at broker Oanda. “Las criptomonedas have been beaten at the beginning of the week, with Bitcoin falling nearly 20% in two days at a time in which the concerns have increased with respect to the new developments with FTX”, he adds.
It seems to have shown that criptomonedas are largely correlated with other risk sensitive assets, such as shares of companies listed in the stock market, in the midst of the difficult macroeconomic context of 2022 high inflation, rising interest rates and risks of recession. In fact, the price of Bitcoin and other crypto rebounded on Thursday after the rally in the Dow Jones and S&P 500 after the favorable data, inflation in the US in October, pointing to a pause in the Fed.
“For a long time, the Bitcoin has been aligned with a greater risk appetite in the markets, but needless to say that what happened last Tuesday, has nothing to do with any of those days,” points Erlam.
The crux of the matter of the turmoil that shook the criptomonedas was a liquidity crisis in the FTX after the dynamics of the yacht brokers banking. Customers rushed to withdraw funds from the Exchange after days of speculation that the group was facing problems due to losses in a related company, Alameda, linked to the collapse of a token that is issued by FTX called FTT.
The executive directors of FTX and Binance, the exchange, crypto world's largest, announced Tuesday that the latter had agreed to buy FTX, pending due diligence, in a movement to stop the liquidity crisis and to prevent a spread more widely throughout the ecosystem. A few hours later withdrew from the operation, after looking at the books and to warn of the regulatory risks that they entail.
“This can be simply a 'moment Lehman' for criptomonedas,” says David Rosenberg, president of Rosenberg Research, referring to the collapse of the investment bank that contributed to the financial crisis of 2008. “Liquidity crises have a habit of appearing during periods of adjustment of the Fed... take this as a warning of what may happen in the future,” he explains.
Stabilization for the Bitcoin
So, where will stabilize again the price of Bitcoin? The last movement is placed significantly below the trading range between 19,000 to $ 20,000, which had been greatly during the last two months.
The criptomoneda largest is now well below the annual minimum previous 17.629 dollars marked in June. “These movements led to the price of Bitcoin below the levels of the key drivers in the 19.200, and 18,300 dollars,” according to Katie Stockton, a partner of the firm Fairlead Strategies, which suggests that this lower level was “key to the preservation of our bias is neutral in the medium term”.
“But the image might not be so terrible”, according to the analysis of Fairlead, which suggests that Bitcoin might even be poised for a rebound. “Investors may want to wait and see before you increase the sales of panic,” adds the expert in technical analysis.
“We will give Bitcoin a week to recover the support (19.200 dollars) before you assume, once again, bias is bearish in the short term, noting that there is a new signal that is contrary to the trend on the weekly chart. The signal is low conviction at this time, but its implications were a rebound for several weeks except a collapse decisive (i.e., Bitcoin avoids multiple locks below the support)”, concrete Stockton in his commentary of market.
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