Crypto investors have already seen one market crash this year with Terra Luna’s collapse, but apparently that wasn’t the end of the turmoil.
This week FTX, which was the second-largest cryptocurrency exchange globally up until a week ago, has effectively gone bust.
As Proactive’s William Farrington explained, the reasons are plenty: the previous ‘superstar’ of crypto, Sam Bankman-Fried, turned out to be a little creative with users’ fund, overleveraging all of the bets that he’s had on different positions.
The result of those gambles: FTX declared bankruptcy on Friday, along with Bankman-Fried’s Alameda Research, which was one of the most prominent venture capital funds in the cryptocurrency space.
“This is huge – two massive players in the cryptocurrency space are effectively going broke. The reverberations throughout the wider market have been massive,” Farrington told Proactive.
“If one project goes to pot, it filters through the rest of the sector – investors get spooked, and that’s what we saw. Bitcoin tanked from highs of $21,000 to lows of $15,000. There’s been a bit of recovery but $6,000 shaved from the price of Bitcoin is massive.”
Catch up on a wild week in the crypto space here: