Bitcoin and cryptocurrencies were rocked this month by the sudden collapse of major crypto exchange FTX. Bitcoin price was changing hands at almost $70,000 12 months ago. Now, it’s changing hands at $16,000-17,000. Meanwhile, JPMorgan’s warning that the price collapse may have just begun came to the fore. According to JPMorgan, Ethereum could drop to $1,000. Meanwhile, attention was drawn to certain cryptocurrency platforms following the FTX collapse. Here are the details…
Big risk for bitcoin and altcoin platforms
Now, there are concerns that $10 billion in Bitcoin and crypto giant Digital Currency Group (DCG) could be in trouble after crypto lending platform Genesis was forced to pause withdrawals and was revealed to be seeking a $1 billion emergency loan. As we reported on cryptocoin.com this week, Genesis, one of the largest crypto lenders that forms part of DCG’s sprawling crypto empire, blamed the sudden FTX meltdown.
For this reason, the client suspended the shooting. Reported to be worth $10 billion last year, DCG also reportedly owns Bitcoin and crypto miner Foundry, asset manager Grayscale, crypto exchange Luno, and news outlet Coindesk. Before the withdrawal was suspended, Genesis requested a $1 billion emergency loan from investors. Joseph Edwards, investment partner of Securitize Capital, made a statement to Reuters. “Genesis has had a target on its back for days,” he said. He added that because of Genesis’ close ties to brokers, family offices, this is “a sign of worse outcomes” for the crypto market.
FTX was at the root of the collapse
FTX’s sudden collapse this month was triggered in part by reports that a significant portion of its balance sheet was made up of illiquid cryptocurrencies of its own creation. Just last week, FTX filed for bankruptcy protection. Its founder, Sam Bankman-Fried (SBF), resigned as CEO. “Genesis was exploring all possible options amid the liquidity crunch caused by the FTX news,” a company spokesperson told the Journal. He also used the following expressions:
After reviewing a number of options, we made the difficult decision to temporarily suspend redemptions and new credit creation in the lending business in order to determine the best possible solution and outcome for clients.
The Genesis statements that followed the FTX explosion caused confusion among the crypto community. Crypto skeptics speculate that this could be the next domino to fall, as rumors fly over the future of crypto exchange Gemini and crypto financial services firm Galaxy Digital.
Dr. Doomsday made a statement
Dr. NYU economics professor Nouriel Roubini, known as Doom (Apocalypse), wrote on Twitter, “(Genesis, Grayscale, Galaxy, Gemini) are now in big trouble and/or crashing. From the Moon, all the lunatics are now falling to Earth,” he said. Cory Klippsten, a critic of non-Bitcoin cryptocurrencies and CEO of Bitcoin buying app Swan Bitcoin, spoke of allegations that DCG is “desperate for sale.” “The situation is apparently not looking good for Genesis,” he said.
However, some in the Bitcoin and crypto space were not impressed by the succession of negative reports. “In the long term, it is unlikely that the crypto-asset space will pull back significantly,” said Martin Hiesboeck, head of Uphold Blockchain and crypto research. He also used the following statements:
The risk of infection is now higher than ever before. However, we believe this will change. Note how small the space is still. This is not an Enron or Lehman moment.
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