With the cryptocurrency market once again having been pushed into bearish territory in light of FTX’s dramatic collapse at the hands of former CEO, Sam Bankman-Fried, a majority of the market has suffered detrimentally, having been plunged into a space dominated by red candlesticks.
once again pushed beneath the $20k threshold, it has shed 6.28% across the past week and appears to be eyeing a new price target of $13.5k as investors rush to leave the market and recoup some of their losses.
On this note, having taken over from former CEO, Sam Bankman-Fried, John Ray has begun to reveal various facts that shed light on how the castle of sand dissipated from a multi-billion dollar company to one that only retained $600,000 amidst its bankruptcy.
On the institutional side, Grayscale’s ongoing fight to be granted status
as a Bitcoin
ETF has intensified as they eye up a win against the SEC in their lawsuit claiming that the SEC erred in denying their bid to offer a BTC ETF.
It is likely that across the coming week the fallout of FTX’s dramatic collapse will continue to reverberate throughout the market, resulting in detrimental losses across the likes of BTC, ETH, and Solana, amongst various other assets in the top 100. On a more micro scale, it is likely that John Ray’s takeover of FTX may signal a new future for the company as they enter bankruptcy, perhaps granting some reparations or solace to its former user base who collectively lost billions.
Additionally, as Grayscale nears a win against the SEC it can be determined that more companies may begin to view their commitment to gaining status
as a BTC ETF as a sign to begin building into the space and contributing to the convergence of traditional and decentralised finance.
Bitcoin Price Target Plummets To $13.5K
As FTX has suffered a significant collapse, the majority of the market has been dragged through the mud, with Bitcoin
being no exception. In what has already been a decimating year for Bitcoin
’s valuation, having shed 75.75% from its ATH this time last year, Bitcoin
has begun to plummet further beneath the $20,000 resistance, with no signs of stopping. As a result, Bitcoin
has lost a substantial 6.28% in valuation and shed almost 20% of its total trading volume across the past week alone.
’s steady decline in line with the remainder of the market has led analysts to predict that the next price target for BTC is $13,500, thus consolidating any bearish sentiments held by investors. However, there is liquidity at $18.5k, $17.2k, and $15.5k, suggesting that BTC’s valuation could climb moderately, yet the larger liquidity remains at $13.5k, signalling that this is perhaps a more viable future price point. Additionally, analytics resource, Material Indicators, have calculated that the total bid liquidity between the spot price and $13,000 is $195 million on the Binance order book.
This bearish analysis has also been followed by various sentiments within the wider crypto community, as some analysts urge investors to ‘exit all markets’ as altcoins could accrue a collective loss of up to 50%, with some analysts suggesting that investors are ‘not ready for whats coming’.
FTX Bankruptcy Begins
With this crisis having plunged the cryptocurrency market into a state of jeopardy, the bear market has been inescapable, with the FTX collapse at fault. As one of the biggest exchanges in the world, few would have ever thought that FTX could conceivably fail. However, across the past week, the exchange has endured a decimating crash as a result of information leaked about the operational structure of the exchange and its founder, Sam Bankman-Fried’s, hedge fund Alameda. With billions of investor funds lost and Sam Bankman-Fried losing his role as FTX CEO, John Ray has assumed the role and has begun to unravel the crisis, providing information on how the crash was able to happen.
Having formerly led various companies through bankruptcies, John Ray was called in to guide the company through the bankruptcy and liquidation process. However, despite his extensive experience in the former, Ray revealed that he was shocked at the state of the cryptocurrency exchange, stating: ‘Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised system integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals’.
Ray has since revealed that the financial information provided by FTX and Sam Bankman-Fried is untrustworthy, with the former CEO and those perceived as complicit in illicit activity to be investigated moving forward. Shockingly, Ray has also claimed that the fair value of FTX’s digital assets totals $659,000, a vast deduction from its former valuation of 32 billion dollars – marking this as one of the worst bankruptcies in the crypto world, and the finance world at large.
Grayscale Eyes SEC Win
Having filed a lawsuit against the SEC in June 2022, alleging that the SEC denied its spot Bitcoin
ETF unjustly, Grayscale is eyeing a win against the SEC by exploring another regulatory alternative that could make their Bitcoin
ETF a viable reality. The Grayscale Bitcoin
Trust (GBTC) has consistently traded at a significant discount to the price of the spot Bitcoin
it holds, with the net asset value (NAV) hovering at around 40%. In order to provide a testament to the quality of their defence, Grayscale has proposed a Regulation M relief filing with the SEC.
Regulation M would allow for a fund to simultaneously create and redeem shares if granted, as the rule was designed ‘to prevent manipulation by individuals with an interest in the outcome of an offering, and prohibits activities and conduct that could artificially influence the market for an offered security,’ the Financial Industry Regulatory Authority (FINRA). If the SEC grants the GBTC’s transition into an ETF, then Regulation M can be implemented.
Grayscale’s legal officers have predicted that the lawsuit is set to ensue for up to 12 months as they continue to fight against the SEC and the animosity towards the crypto world from regulators in light of the Terra Luna and FTX crashes respectively.
Author: Gate.io Researcher: Matthew Webster-Dowsing
* This article represents only the views of the researcher and does not constitute any investment suggestions.
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