According to Travis Hoium, analyst at consulting firm The Motley Fool, investors need to be extremely careful when evaluating FTX Token (FTT). Because the recent increase in altcoin value does not reflect any intrinsic value. The token, which was initially associated with the bankrupt FTX crypto exchange, has seen its value more than triple in just over a week, largely due to speculation surrounding the potential revival of FTX as a business. Here are the details…
A warning came about Altcoin
Hoium emphasizes that FTX Token is at best a speculative asset with no clear utility at the moment. Despite originating as an altcoin designed to provide trading fee discounts for active investors on the FTX exchange, recent revelations about the rise and fall of FTX have revealed the speculative nature of the token. It was revealed that convicted fraudster Sam Bankman-Fried, who ran FTX, used FTX Tokens as collateral for loans and contributed to the collapse of the stock market.
It was alleged that the value of the FTX Token was manipulated to maintain Bankman-Fried’s margin positions, ultimately leading to the collapse of FTX. The bankruptcy and legal proceedings surrounding Bankman-Fried’s actions should have made clear the token’s true value. However, recent market behavior suggests otherwise.
Is FTX being resurrected?
There is speculation in the market that FTX may make a comeback as an exchange. While this is a possibility given the brand’s recognition and previous customer base, Hoium emphasizes that there is no guarantee that the exchange will assign any real value or benefit to the FTX Token. Hoium urges caution, emphasizing that any increase in the value of the FTX Token is purely speculative at this point, and traders are not seemingly deterred by the lack of fundamental utility.
Hoium points out the importance of fundamental value in cryptocurrencies. Over the past three years, the market has witnessed risks associated with speculative tokens that have no utility or purpose. According to Hoium, betting on an altcoin associated with a bankrupt exchange raises this risk to another level.
FTT does not meet the required criteria
Ultimately, Hoium reinforces the important lesson that cryptocurrencies must provide fundamental value by either operating a Blockchain or serving as a medium of exchange for a product or service on the Blockchain. However, FTX Token cannot currently meet this criterion. Investors are advised to approach FTX Token with caution, considering its speculative nature and lack of inherent benefits. The analyst says:
If there’s one thing we’ve learned over the last three years, it’s that speculating on tokens that have no utility or use is a great way to lose money. Betting on a bankrupt stock market takes this risk to another level.
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