Cryptocurrency market drops more than $100 billion in a day

Cryptocurrency market drops more than $100 billion in a day

The global market for cryptocurrencies fell rapidly this week, losing more than $100 billion in a 24 hour period, after Binance announced it would not acquire FTX and the fate of the beleaguered exchange hung in peril.

How smart money is playing the game of criptocurrency.

The world's largest criptocurrency exchange, FTX, had myriad problems ranging from mishandled customer funds to alleged US agency investigations. The total market cap for cryptocurrencies fell below the $1 trillion mark, and the price of the digital currency fell below $16,000 on Wednesday, hitting a two-year low.

The drop inBitcoin price was a sign of the extreme volatility and vulnerability of the market for cryptocurrencies this week, as a result of the run on one entity, FTX. Alex Konanykhin, CEO of Unicoin, said that these problems stem from the lack of assets backingBitcoin and other cryptocurrencies.

Jason Lau, COO at Okcoin, told TheStreet that the price ofBitcoin is reacting to multiple market factors, including the fallout of FTX's collapse and the positive, risk-on sentiment from the CPI report. I expect continued price volatility until the FTX incident is resolved, and I am seeing increased recognition of the value ofBitcoin as an uncorrelated asset that can be self-custodied, which will likely provide price support. Non-crypto sectors and organisations were negatively impacted by FTX's liquidity crisis and insolvency. The Ontario Teachers Pension Plan in Canada had been part of the $400 million Series C funding rounds in 2021, and was seen as a group negatively affected by the fallout.

There will be a recovery, according to others in the industry.

William Quigley, co-founder of Tether, one of the world's largest stable coin, told me that the price of cryptocurrencies will fall in the near-term, but the markets are resilient. In the next six months, most of the negative impact of the collapse of the FTX will be dissipated. The mess may end up being a positive experience for the industry, according to Ben Goertzel, CEO of SingularityNET, a blockchain and artificial intelligence project. It's not so bad if a player with unsound business models gets shaken out of the market and regulators are nudged to put into place thoughtful rules that enforce greater transparency among large actors in the space.