The Price Of Bitcoin Will Be Affected By FTX Fluctuations

FTX.COM, a cryptocurrency exchange platform, has constantly gained faith from investors due to the firm’s provisions of tokenized stocks, leveraged tokens, and an OTC desk on the platform. FTX is recorded as one of the third-largest crypto exchange platforms after Binance and Coinbase Exchange. But all this development went for naught; currently, the FTX is facing huge losses.

At the end of January 2022, FTX released data that shows the company completed a $400 million (USD) Services C fundraise, which resulted in increasing the valuation of the company by up to $32 billion (USD). At the mid of February 2022, the exchange’s FTX per day trading volume was $10 billion (USD). But the price of cryptocurrency shows a rate of decline in 2022, resulting in a reduction of the FTX network by up to $8 billion (USD).

The United States Securities and Exchange Commission (SEC) has started an investigation on how FTX manages the users’ funds and its crypto lending activities. Now the regulators are examining whether FTX maintained securities laws by keeping users’ crypto assets separate or whether it traded against the users.

The downfall of FTX has had a huge impact on the crypto market. The largest cryptocurrency, Bitcoin, is facing this effect. The popular banks in America have estimated that there is a high chance that Bitcoin will drop its production cost up to $15,000 (USD). JP Morgan, one of the researchers, believed that FTX fluctuation would have an impact on bitcoin’s price in the coming weeks.

Arthur Hayes, co-founder of BitMex, stated that it will be a difficult task to get a bail for the FTX, maybe it will take time for users to recover their frozen funds on the FTX platform. He further added that the major cryptocurrencies like Bitcoin, Ethereum, and Solana may be affected due to their price surge.

According to the reports, Sam Bankmman-Fried of Alameda purchased FTT tokens at a lower price. The entity waited a long time to increase the price of FTT tokens. After some days, Alameda started borrowing “real money” by using these highly inflated FTT tokens as collateral. FTT lost up to 90% of its value this week. It led Binance to pull out of the bailout deal with FTX.