For more than a year, cryptocurrencies like Bitcoin, Ethereum, and others have been in a slump, failing to hit record highs.
The Fed’s tightening of monetary policy was what caused equities and cryptocurrencies to decline. Although the collapse of Terra affected whole ecosystems as early as May, cryptocurrencies were particularly heavily damaged. We believed that the situation could not get much worse at the moment.
Sam Bankman-Fried, the great savior, has rescued faltering enterprises with hundreds of millions of dollars, but he has also made blunders while balancing multi-billion dollar valuations. He made errors that led to the collapse of his own empire and a long-lasting loss of faith in the bitcoin sector. Institutional investors who must now write off their shares were also involved in his multibillion dollar undertakings.
Even proponents of bitcoin, like Mike Novogratz, CEO of Galaxy Digital, are currently being compelled to scale back their hopes for the market’s future growth.
Novogratz predicted that bitcoin will reach the symbolic $500,000 milestone during the following five years less than six months ago. He remained committed to that price objective notwithstanding Terra’s fall.
But since FTX has altered everything, he now rejects this prediction. He still believes that BTC will eventually reach $500,000, but not in the coming five years.
Mark Mobius, the founder of Mobius Capital Partners, predicts that the future of bitcoin will be challenging. He predicts that BTC will likely test the $10,000 level in 2023 as news of a potential bottom formation grows.
This is due to the fact that owning cryptocurrencies has grown less appealing after FTX’s demise. Crypto-yield ventures have exploded in popularity during periods of low central bank interest rates, guaranteeing yields of 5% and higher for holding cryptocurrency. This ecosystem, which was mostly reliant on FTX, now appears to be doomed, according to Mobius:
Several crypto-deposit offerings made returns of 5% or more on their initial investments. However, many businesses who offered such loan rates failed, particularly as a result of FTX.
If this pattern persists, consumers will abandon these pursuits out of fear and stop investing in cryptocurrencies.