The crypto market finished a brutal week with Bitcoin losing over 21% in value within seven days following the FTX saga.
The Market Tumbles
The Halloween party was over but its remnants are seemingly still around the corner. There’s blood all over the crypto market and the crowd panic sells for the exits.
The situation is bad given the fact that the market is valued at $841 billion at the time of writing – the lowest point since the November peak last year.
Experts predicted a difficult week for Bitcoin and other digital currencies as the U.S. Bureau of Labor would release the CPI data. And just when the market was prepared to take a storm, it was the tsunami that hit.
In fact, October’s CPI came on Thursday as a boost. The index hit 7.7%, a slight decrease from last month’s CPI of 8.2%.
While inflation in the world’s most impacted economy remains high, there are some signs of progress in efforts to combat inflation. The news sent Bitcoin surging 6% on the day and Ethereum climbing up 13%.
It Will Fade
But the short-term rally is incapable of lifting up the whole market. Investors’ portfolio has been getting killed under FTX’s exposure since the beginning of the week.
The largest cryptocurrency is among the most affected with over 20% of loss over the 7 days. Bitcoin broke the relevant support level and dropped significantly to around $16,700.
The total market cap, once valued at $2,2 trillion in January, now sits at around $840 billion, according to data from CoinMarketCap. Bitcoin’s total market capitalization this week went from $410 billion to $320 billion.
Altcoins have shown no better performance. FTT, FTX’s native token, is in complete freefall while Solana (SOL), the token backed by troubled trading house Alameda Research, tumbled as much as 50% this week alone.
On November 11, FTX Group officially filed for bankruptcy with the US court following a liquidity crisis. The crypto empire once worth $40 billion blew up within a week.
FTX Group, which includes global exchange FTX.com, FTX US, Alameda Research, and 130 additional affiliated companies, has filed for bankruptcy under US law.
The new report also clarified the connection between Alameda Research and FTX. FTX said it has more than 100,000 creditors, with assets and liabilities between $10 billion and $50 billion.
However, insolvency, which was widely predicted, is not the focal concentration at the moment. The focus is now on the parties associated with FTX company and Alameda Research.
The possibility is that once FTX goes down, the company takes everybody with it.
Crunchbase data listed an entire empire of Sam Bankman-Fried’s investments and acquisitions. Among those, the most prominent ones are BlockFi, Solana, Lido, Circle, Sky Mavis, and Yuga Labs. The domino effect started signaling as companies reported recent losses due to FTX bankruptcy.
Sequoia Capital Investment Fund accepted a $213.5 million loss on its investment in FTX. Sequoia Capital stated in a statement on November 10 that its investment in FTX was reportedly valued at zero.
Genesis Trading Fund, a market maker, confirms that more than $175 million in assets are still held on FTX. Genesis says that it can continue to work normally despite the massive losses. The company said it had no contact with FTX or Alameda, and did not own FTT.
BlockFi, one of the world’s largest cryptocurrency lenders, issued a withdrawal halt following the FTX exchange crisis. The BlockFi event has increased investor concern about the issue spreading to the digital asset sector.
The crash of Terra (LUNA) in May pushed hedge fund Three Arrows Capital to the brink of insolvency. BlockFi claims to have lost $80 million on the fund.