According to a report, FTX bankruptcy proceedings for the crypto industry will be watched closely. Meanwhile, according to experts, many cryptocurrency companies and units depend on the change in US interest rates. So, when will the Bitcoin winter end? Here are the analysts’ comments…
When will the winter season end for bitcoin and altcoins?
Two crypto analysts, David Duong and Brain Cubellis, shared their views on the crypto winter. Undoubtedly, the FTX bankruptcy filing has damaged investor confidence in the crypto ecosystem, according to analysts. Therefore, it will definitely take much more time to regain buyers’ trust. This will definitely increase the duration of the crypto winter. Analysts point to the end of 2023 for the end of the current crypto winter. The crypto winter is predicted to be prolonged after the FTX crash.
The loss of trust caused by FTX is a serious issue in the crypto space. Many exchanges shared their holdings and wallets belonging to them. Crypto exchange Coinbase shared that it has a solid risk management program and a strong capital position. The crypto exchange added that it generally does not comment on crypto events, but for the sake of clarity, it does not have any exposure to Genesis Trading. Coinbase said it will continue to work to grow the cryptocurrency responsibly. He also assured that he will continue to protect his customers.
The crypto exchange announced on November 18, 2022, “We are based in the USA, which is our headquarters. “We hold our clients’ assets in a 1:1 ratio, do not transact against our clients and do not use their funds without permission, and provide the transparent accounting and auditing required of a public company.”
Latest updates on crypto winter
GameFi-focused video platform Cheelee has launched a $200 million crypto winter solidarity fund. The investments will be made through the crypto winter solidarity fund managed by Roman Alekseev and his partners, according to his latest Instagram post. “We may experience a few months of stagnant prices,” Arca CIO Jeff Dorman said in a recent interview due to the impact the collapse of FTX has had on the crypto industry. Ethereum, the second most traded cryptocurrency, is predicted to drop below $1,000 in the crypto winter.
It is also noteworthy that the Ethereum price has been falling steadily since the beginning of the year. As we reported as Kriptokoin.com, ETH has been falling since Merge. Now analysts are watching how the recession and the US tightening policy are affecting inflation worldwide. If the dollar becomes more stable, it may become increasingly difficult to hold long positions in crypto or other long-term risky assets.
Citi analysts call bearish for Bitcoin and altcoins
A Citi analyst has warned of the risk of a wider contagion to the crypto ecosystem from the collapse of crypto exchange FTX. He added that the crypto industry does not have a “significant lending platform as a last resort.” Citi analyst Joseph Ayoub explained that the overall cryptocurrency market is facing “contagion” risks from the explosion of FTX. Troubled crypto exchange FTX filed for Chapter 11 bankruptcy last Friday. The Citi analyst warned users using the following statements:
I think there is a wider risk of contamination in the ecosystem.
However, according to the analyst, “The bankruptcy is unlikely to spread to the wider financial markets”. This is mainly because the US stock market is worth $43 trillion versus the crypto space being around $830 billion.
Companies may try to gain more market share
Ayoub also predicted that companies in the crypto sector would face renewed skepticism and trust issues, but stated that this also means other firms could take action to gain more market share as one of the biggest players collapsed. According to the analyst, the contagion can continue for a significant amount of time and the amount of companies involved and the amount of investments related to FTX and after Chapter 11, it may take a long time to resolve.
Unlike Binance CEO Changpeng Zhao (CZ), the Citi analyst believes the FTX crash is different from the 2008 financial crisis, when the government stepped in with a massive cash injection and bailed out Wall Street. The analyst used the following statements:
The current situation seems almost ironic as we previously thought Sam Bankman-Fried and FTX were the lender of last resort… Now it seems that there is no major lender of last resort.
JPM analysts also shared the comments.
Analysts at JPMorgan Chase similarly said last week that fewer players in the crypto space are now able to bail out weaker players. “The number of organizations with stronger balance sheets that can bail out those with low capital and high leverage is declining,” they wrote, estimating that the Bitcoin price could drop to $13,000.
Prior to FTX’s filing for bankruptcy, Binance was considering buying the rival crypto exchange. However, after due diligence, the company decided to withdraw from the deal, citing “mismanaged client funds.”
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