Important points
- FTX's former CEO and founder, Sam Bankman Fried, was found guilty on all seven charges he faced in connection with the misappropriation of customer funds and the exchange's eventual collapse.
- While the ruling may not have a direct impact on crypto market prices, some market watchers have warned that the ruling could give retail investors false buying signals. .
- Although some retail investors may be returning to cryptocurrencies, they should not restore confidence in cryptocurrencies too soon.
- There is renewed optimism surrounding Bitcoin as more traditional financial players enter the space, but that doesn't necessarily apply to all other cryptocurrencies.
Almost exactly one year after FTX's collapse, its founder and former CEO was found guilty on multiple fraud charges. This ruling was expected by many, but what does it mean for the future of the crypto market and, more importantly, the retail investors who put their money into it?
Will there be an impact on the price of the virtual currency market?
Despite last year's cryptocurrency market carnage, the asset class has enjoyed a fairly strong year in 2023, especially with respect to Bitcoin, and this ruling is unlikely to change that anytime soon. However, it may be giving false hope to some individual investors.
“Most individual investors are aware that both FTX and Alameda still have a significant amount of assets in their holdings that have yet to be liquidated,” Standarddao CEO Aaron Lafferty said in an interview. I don't think they understand it at this point,” he said.
The actual impact on the price of cryptocurrencies such as Bitcoin, Ether, and XRP will depend on when liquidations begin, how much is sold, and how quickly they occur. But Mr. Lafferty said, “Personal investors who look at this ruling and say, “Oh, yes, the market is business as usual, let's buy, this is a great signal,'' even though it really is, and it hasn't happened yet. He said it could cause damage to the house.
Should this ruling restore investor confidence in cryptocurrencies?
The immediate aftermath of the FTX bankruptcy was dubbed the crypto winter, but it may be over. Investors cautiously returned to cryptocurrencies in October due to volatility in tech stocks and a rebound in crypto prices, especially Bitcoin.
However, investors should not immediately regain confidence in cryptocurrencies following this ruling.
“Cryptocurrency exchanges remain largely unregulated, and investors should not leave their cryptocurrencies on exchanges. They can and should manage their own assets. Use it, but then move it to your wallet,” said Peter Eberle, Castle CIO and President. Funds said in an email.
Many people who lost money on FTX are still waiting for their money back. The company recently announced a new plan to refund up to 90% of distributable assets, but there are still many steps before implementation.
A makeover of the virtual currency market?
StandardDAO's Rafferty said he believes “cryptocurrencies will forever have a stain on retail investors” and that a rebrand is necessary.
That may already have begun with more traditional financial institutions entering the industry.
“I was recently attending the Coin-Alts conference in San Francisco and one of the speakers told me that unlike in 2017 when the first conference was held, people at the conference wear hoodies. “There are more and more traditional financial players in the industry,” said Hebert.
According to Eberle, one of the biggest takeaways from the ruling is that Bankman Freed is no longer the face of the cryptocurrency world.
Where will virtual currencies go from here?
The presence of more traditional lenders has boosted investor sentiment to some extent.
Overall optimism regarding the approval of a Spot Bitcoin ETF has increased since BlackRock filed for its Spot Bitcoin ETF offering in the summer, with market participants now seeing approval as imminent. There is.
However, the excitement surrounding Bitcoin may not extend to other cryptocurrencies. The Bitcoin Dominance Index is at levels not seen since March 2021.
“Importantly, there is a huge tailwind for Bitcoin as BlackRock, Fidelity and two other $2 trillion+ asset managers have filed for spot Bitcoin ETFs, “Swan Bitcoin managing director Terrence Yang said. bloomberg.
“On the other hand, virtual currencies are destroying the savings of many Americans, especially the poor and middle class, through these pump and dumps, and these unregulated casinos are basically giving shillings to the American people. “We destroyed the digital penny stock. It doesn't look very good,” he said.
