Confidence in cryptocurrencies is shaken

The collapse of a series of "big guys" in a short time made the participants gradually doubt the future of cryptocurrencies.

The crypto market has just had a tumultuous week, culminating in the FTX exchange filing for bankruptcy. The event occurred just a few months after the crash of Luna and USDT , which shook the market and a series of prominent names such as Celsius, Voyager, Three Arrows Capital defaulted and disappeared. Bitcoin - the largest digital currency in the market - from a peak of nearly 69,000 USD in November last year to a quarter of its value after a year. A series of other cryptocurrencies plummeted.

Bitcoin is currently down to a price of around $16,000, a quarter of its November peak last year. Photo: Luu Quy

According to Reuters , users are questioning the viability of the digital currency as the Bitcoin bubble burst and "important players" gradually disappeared from the market. As bank interest rates continue to rise, risky investment segments such as cryptocurrencies are gradually left out and the crash of FTX could be the last straw.

"Trust is a bit shaken, because if you can't trust FTX , who else can you trust?" Yat Siu, co-founder of Animoca Brands fund, said.

Earlier this year, FTX was valued at $ 32 billion, is the top exchange and one of the names most trusted by users in the cryptocurrency market. Founder Sam Bankman-Fried once raised high hopes for a regulated cryptocurrency exchange. However, the collapse of FTX came within about a week of the financial vulnerabilities being exposed. As soon as the bad news about FTX was published, 6 billion USD from this exchange was withdrawn by users in 72 hours.

Analysts at JPMorgan said the FTX crash "created a crisis of confidence and reduced expectations of rescue from other crypto companies". Meanwhile, Antoni Trenchev, co-founder of crypto lending firm Nexo, said that "failure from FTX will be a dark cloud covering the entire industry and institutions will stay away from the sector until it is done." Everything calms down."

Experts also say that the consequences of the collapse of FTX will not be resolved in the short term. Conversely, they can create a broader domino effect. Recently, crypto lending company BlockFi said it is suspending customer withdrawals until there is clear information about FTX. Speaking at the Token2049 crypto conference in London recently, Andrei Kazantsev, head of crypto trading at Goldman Sachs, said their primary concern right now is to monitor the risks for some clients. customers who were interested in cryptocurrency trading activities. They are inherently attracted to the volatility and promise of high returns in this industry.

Different from traditional finance, cryptocurrency entities now operate in a legal "gray zone" and are less likely to be protected. For example, user deposits at crypto-lending companies will not be insured by the government. Analysts say the problem with FTX could cause exchanges to be more tightly controlled by the government in the future.

In addition to the market going down, confidence was shaken by the failure of those who were once "stars" in the industry. After the incident with Do Kwon in May, Sam Bankman-Fried was considered a knight of the cryptocurrency market when he came out to rescue companies on the verge of bankruptcy. But then he himself failed to save himself.

"The game has to go, the industry needs to keep growing, but it's certainly a step backwards when industry representatives are in this situation," said Jean-Marie Mognetti, CEO of CoinShares. , speak.

Although the market is in a dark period, there are still investors who put their faith in cryptocurrencies. Speaking to CNBC , Michael Saylor, President of Microstrategy, said he will continue to buy Bitcoin when the opportunity arises. Several other funds also turned to FTX competitors, like Coinbase.

According to experts, participants will now need to rely more on professional asset managers to carry out financial due diligence of the project before making a decision. The recent incidents mostly come from the lack of transparency of the project owners, so there is a need for clearer legal frameworks in the field of cryptocurrencies.

“The crypto industry is getting cleaner, although the process is a bit painful,” Changpeng Zhao , the owner of Binance, said on Twitter Nov. 14.