FTX’s problems continued to have an adverse effect on the cryptocurrency markets on Tuesday, which once again paved a way for the bears. Bitcoin, the most valuable cryptocurrency by market capitalization, was recently trading at around $16,200, a more than 10% decrease to its lowest point in two years.
Following the recent collapse of Sam Bankman Fried’s exchange FTX, the price of bitcoin, along with Ethereum, Ripple and other altcoins, has experienced a significant selloff over the past 24 to 48 hours.
According to commodities analyst Mike McGlone of Bloomberg Intelligence, the recent fall of FTX may not be the worst scenario for the cryptocurrency markets this year. The collapse of Bankman- Fried’s exchange is probably what started this. The tweet says that as a result, Bitcoin may once again hit the $10,000 mark.
McGlone added that the current drop in bitcoin price is well below the $18,000 mark and a drop in altcoin price could lead to capitulation in most markets, which have been under pressure since the beginning of the year. According to a study by McGlone, a massive reversal of risky assets has become apparent today as Bitcoin plunges into the $17,600 area.
What Happened?
Bitcoin’s first seven-week losing streak started in May 2022 as a result of the market’s response to news of the Terra Luna bank run and the consequent collapse of LUNA Classic. Analysts are making comparisons between the latest FTX bank run and earlier this year’s Terra Luna occurrences in light of the reported significant budget deficit.
After the initial price hike by Binance LOI for FTX, concerns about FTX’s balance sheet have caused the market to crash severely. According to reports, the buyout could be in jeopardy in light of FTX’s efforts to raise $6 billion to fill a hole in its balance sheet.
