No, FTX is not solely responsible for bankruptcies
Nov 28, 2022
FTX reignited a contagion phenomenon after its bankruptcy, but one important indicator was eclipsed from the mind of the crypto sphere.
Despite FTX, remember last summer
The cataclysm caused by the FTX bankruptcy, exacerbated by the recent crash of BlockFi and the associated Ponzi charges, continues to generate fear of contagion. As the cryptocurrency sector struggles to recover from the crisis, the closure of a new player is removing the knife in the wound. In fact, the Bitfront cryptocurrency exchange platform, started by the company Line, announced that it would close its doors in March 2023.
In a press release, the company said that this initiative was necessary for the development of its blockchain, due to the lack of means and given the uncertainty linked to the current situation of cryptocurrencies. However, contrary to what one might think, the closure would not be a consequence of the fall of FTX but rather the solution to a disease that has been dragging on since last summer.
"Despite our efforts to overcome the challenges of this rapidly changing industry, we have regrettably determined that we must shut down BITFRONT in order to continue to grow the LINE blockchain ecosystem and the LINK token economy. Please note that this decision was made in the best interest of the LINE blockchain ecosystem and is not related to recent issues with certain exchanges that have been accused of misconduct." Bitfront press release excerpt.
Through these statements, Bitfront hints that his company will find it difficult to resist the bear market and the crypto winter that, despite everything, has lasted since last summer. We might even wonder if the evil didn't run deeper since Bitcoin and its ilk began to see their value fall in November 2021.
What to expect next?
If some have forgotten it thanks to the different funds claimed by the experts, it is clear that the crypto winter is still here. As BTC struggles to recover, the industry grapples with regulations, and bankruptcies continue, FTX is far from solely responsible for the situation. Another worrying element: according to Glassnode, capitulation would be more relevant than ever, with Bitcoin losses valued at $10.8 billion. It would be the fourth largest on record and new investors would be hit particularly hard.
Therefore, it is recommended not to take the cryptocurrency boom at face value, as the market is still far from stable. This is especially true today, as Bitcoin gained 2% in value in 24 hours.
Be warned though, this bit of thinning does not appear to have released the little orange piece of the period of low volatility that has nailed it since November 10th. As some experts predict, another sharp drop is still possible due to the protracted capitulation.
Finally, as Bloomberg reminds us, the current crisis is still a direct consequence of the crypto winter of last June. Despite FTX's mismanagement, Sam Bankman-Fried's empire rose to prominence when Celsius Network or Voyager Digital showed the first signs of weakness. Overconfidence placed in the exchange took hold, plunging struggling companies back into obscurity. Therefore, contagion remains the main danger within the industry and both the domino effect and the extension of the crypto winter could mean the end of the business.
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Disclaimer: This article is presented as it is, it is my personal opinion. There is no plagiarism in it and the sources have been referenced.
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