“I think the shoes are down,” said crypto billionaire Sam Bankman-Fried, saying we have reached the bottom. In addition, Bankman-Fried shares the developments he is most excited about.
“I think the shoes fell off!”
As you follow on Kriptokoin.com, the crypto market has been making a slight comeback since Monday. Bitcoin is up about 22% on a weekly basis, trading above $23,500. Ethereum, on the other hand, experienced an even stronger recovery. The leading altcoin has gained more than 46% in the past 7 days. ETH is changing hands at about $1,557 at press time. Sam Bankman-Fried interviewed Raoul Pal, CEO and co-founder of Real, on July 8. Crypto billionaire says:
I guess we don’t expect the other shoe to drop right now. I think the shoes fell off. Right now we’re in a “well, let’s see what the world is going to be” type of situation. But I don’t completely trust it. Honestly, I don’t give financial advice either.
“The relaxation that should have happened in the crypto market has taken place!”
Both Pal and Bankman-Fried agree that the crypto crash, which has slashed its $2.9 trillion market cap by more than 60% in eight months, is not industry-specific. Expectations of increase in interest rates caused many markets to shake down. This triggered a domino effect. The Federal Reserve implemented the second rate hike of this cycle on May 4. Since then, Bitcoin has dropped by about 44%. Bankman-Fried comments:
I guess the way I put it, I don’t see any particular reason why we shouldn’t be at the bottom. I’m certainly not trying to say we’re at the bottom. However, I think the relaxation that should have happened has taken place.
How does he choose the crypto projects to be rescued?
Crypto billionaire Sam Bankman-Fried is 30 years old and the founder of crypto exchange FTX. Meanwhile, the young billionaire has taken action to stop the crypto contagion that has plunged some exchanges and lending platforms into bankruptcy. Crypto loan platform BlockFi has received a $400 million line of credit. Also, Voyager Digital received a $500 million water of life.
Bankman-Fried tells Pal that he chose the most important places to distribute capital. The billionaire says there are projects that would be good if it weren’t for the really bad, short-term liquidity crunch. When it comes to deciding what to salvage and what to shatter, Bankman-Fried says, it’s not just about looking at perfect systems. He also notes that it is not about investing in a money pit. Instead, he says, he focuses on situations where a small capital expenditure can prevent the entire system from unwinding.
“Terra deserved it!” What is the difference between DeFi and CeFi?
The first casualty of the downturn was Terra (LUNA) and its stablecoin, UST, was no surprise to the young billionaire. Bankman-Fried said, “Everything to come depends on an unpegged stablecoin whose price has never dropped this much. In a way, he deserved it,” she says. As for central finance, CeFi, Bankman-Fried notes that one of the main issues is lack of transparency. For example, he says, “The time to act was a year ago when the world realized where Celcius was.” However, he makes the following statement:
Since DeFi is on-chain, it’s at least more transparent. No one was surprised once the Terra LUNA ecosystem exploded. Because you could see it happening in real time.
The CeFi world is a world of how many times the same collateral is used on different loans. It’s also an area where you can’t say an institution is giving away more assets than it has, also known as rehypolocation. The worry for Bankman-Fried is that you’re effectively trading much more leverage than you think and going too far before the public realizes things.
What excites SBF the most right now?
Bankman-Fried said, “I think it’s important to get payments down really well, actually both domestically and internationally. “I think this is a huge area of opportunity.” Also, the crypto billionaire considers it a huge opportunity for the consumer market structure to reach a place where the average consumer has fair access to financial markets compared to the largest institutions.
Is it possible to mainstream the web3 space and hire billions of people? Bankman-Fried notes that several improvements need to happen to support the infrastructure. According to him, the first of these is user-friendly interfaces, such as applications that are installed and work well. In this context, Bankman-Fried makes the following assessment:
For the space to scale to billions of people, it needs to have really nice user experiences. Because that means scaling up products to people who aren’t naturally incredibly excited to use them. This is a scale for people who have no intention of using the products. This is a much higher bar.
Second, he says the industry needs regulatory clarity. He notes that when that happens, more capital from institutional investors will open its doors. Finally, he states that projects should create real use cases such as well-thought-out social media platforms and payment apps.
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