Frankfurt The dramatic bankruptcy of crypto exchange FTX in mid-November shook the entire industry. But if you are to believe the eminent fund manager Mark Mobius, the massive price drop of the oldest and largest cryptocurrency Bitcoin could go much deeper.
Mobius expects Bitcoin to fall towards $10,000 mainly due to the dislocations triggered by the FTX scandal. That would be a further 40% drop from the current level.
This would take the cryptocurrency back to its spring 2020 lows after the outbreak of the Covid pandemic. Meanwhile – in November 2021 – Bitcoin was worth around $65,000 after a long rally.
In an interview with the Bloomberg news agency, Mobius made it clear that it would not invest its own capital or client funds in digital assets – it was “too dangerous”. However, Mobius considers a complete demise of Bitcoin & Co. unlikely. “Crypto is here to stay because there are investors who still believe in it.”
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FTX, once the third-largest cryptocurrency trading platform in the world, had to file for bankruptcy protection on November 11. Founder Sam Bankman-Fried is accused of stealing billions of dollars in client funds. He is said to have partly plugged holes in his Alameda hedge fund and partly enriched himself.
>> Read here: The bankruptcy of FTX and its consequences for the crypto world
In just three years, Bankman-Fried has built an empire that includes more than 100 subsidiaries around the world. Lawyers and restructuring specialists are now in the process of unraveling the complex structures of the network of companies seeking assets to at least partially compensate the more than one million creditors. FTX says it owes about $3.1 billion to the top 50 creditors.
China crisis fears exacerbate losses
At the start of the week, the major cryptocurrencies continued to fall. Bitcoin meanwhile was down more than 3% and was listed at around $16,200. Since the collapse of FTX, losses have amounted to around a quarter.
The second-largest cryptocurrency, Ether, fell around 2% to $1,170 on Monday. Smaller digital currencies like Solana, Avalanche and Dogecoin suffered even heavier losses.
Shares of companies that make their money from the crypto industry have also come under renewed pressure. The price of the Coinbase crypto exchange fell by more than three percent. Within a month, the company, which went public in the United States in April 2021, lost around 40% of its market value.
Behind the current losses in the crypto world, there is not only the upheaval surrounding FTX, but also the turmoil in China. In more and more cities across the People’s Republic, people are taking to the streets against the government’s zero Covid strategy, presenting the Communist Party with the biggest challenge since the Tiananmen crisis more than 30 years ago.
Fear of an escalation in the conflict has prompted a global flight into conservative investments such as the Japanese yen, Swiss franc and government bonds of major economic powers. Investors were increasingly avoiding risky investments such as cryptocurrencies.
After: European FTX customers could be paid more easily