After $2 trillion crypto crash, what happens next? PBS News Weekend

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Crypto Crash

Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now. Paul Brody is Global Blockchain Leader for EY (Ernst & Young). Under his leadership, EY is established a global presence in the blockchain space with a particular focus on public blockchains, assurance, and business application development in the Ethereum ecosystem.

In an interview with CNN Business this week, Buterin said he wasn’t surprised by the crash, because he’s seen it all before. By Thursday, bitcoin had recouped some losses and was back above $41,000. But a Friday statement from Chinese officials reiterating the need to crack down on cryptos beat bitcoin back down. This week, a combination of factors, including government warnings about increased regulation and tweets from influential market mover Elon Musk, added fuel to an already jittery market. “Don’t get caught up in the FOMO, but you’re also at risk of a field that the business model is taking your assets co-mingling them, often in ways that are not allowed by our current laws,” he said. The high-profile crypto collapses have prompted calls from activists, elected officials and others for more regulation from the federal government.

Fears of crypto contagion are growing as another company’s finances wobble

Tokens, which has made that crypto particularly vulnerable to FTX’s implosion. This situation has also made investors warier of crypto in general, and there’s a chance prices could continue to drop across the board if investor concern grows. Also saw its stock price drop by more than 20% in a matter of days, despite its CEO reassuring investors that the company is financially sound and has no material exposure to FTX.

Crypto Crash

Crypto prices can be dramatically affected by major events, such as exchanges or coins crashing. They can also sink with higher interest rates, rising inflation and other macroeconomic factors that can affect how confident people feel investing their money in risky alternative assets. Other digital assets sank, with the second-largest token ethereum falling 9% Wednesday and down nearly 30% from a week ago, while FTX’s coin fell 7% for an 85% collapse over the last week. Fewer investors were crypto crash exposed to crypto’s steep drops during the last downturn, so more now stand to lose money this time around. Some new crypto-adjacent companies may also falter during the downturn in this crowded crypto market, but coin values will likely advance again in the long term, John Browning, co-founder and managing director of BAND Financial said in a note Tuesday. FTX, backed by elite investors like BlackRock and Sequoia Capital, rapidly became one of the biggest crypto exchanges in the world.

At its peak in November, the entire crypto market was valued at $3.1 trillion, according to data from CoinGecko, a company that aggregates crypto data. The price of bitcoin has fallen by more than half from its high. The digital currency luna is now nearly worthless, and a related coin, TerraUSD, is on shaky ground.

The future of cryptos

On top of that, the crypto economy seems disproportionally driven by retail investors, who treat the sector like a halfway house between conventional day-trading and straightforward gambling. As rising costs bite, those investors may be forced to liquidate some of their holdings, pushing the sector even further into the red. Bitcoin fans may promote an image of their currency as a sort of “digital gold”, with a limited supply that makes it function as an effective hedge against inflation.

  • Cryptocurrency, which is known for its extreme volatility, has witnessed a tumultuous time in 2022.
  • Babel Finance, a crypto lender based in Hong Kong, freezes withdrawals.
  • As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period.

I write about how bitcoin, crypto and blockchain can change the world. Several major cryptocurrencies suffered heavy losses early Monday as the market’s valuation plunged to nearly $900 billion. Ultimately, if there’s a lesson in this situation, it’s that crypto is still an inherently risky investment. Withdrawals Rise After CEO Admits Transaction Problem

There was about $2.6 trillion worth of gold owned as investments as of the beginning of the year, according to Goldman Sachs, with the total market capitalization of gold estimated at around $10 trillion. On Wednesday, the company Celcius became the third major crypto firm in two weeks to file for bankruptcy. This past week, I spoke with Andrew Chang to unpack what’s behind this latest

The crypto hedge fund Three Arrows Capital was the first major crypto firm to go bankrupt in 2022, brought down by the collapse of cryptocurrencies Luna and TerraUSD in May. Those meltdowns roiled crypto markets around the world, wiped out $42 billion in investor value, and led to an arrest warrant in South Korea for the cryptocurrencies’ developers. Volatility is baked into the nascent cryptocurrency market, but the digital assets’ explosive growth in the past year has attracted hordes of amateur and professional investors looking for a quick profit. Many of them ride an upswing and get out, or panic sell when things turn sour, exacerbating gains or losses. On Wednesday, a broad crypto crash wiped out about $1 trillion in market value — a staggering drop from $2.5 trillion just a week ago.

MORE: Feds seize more than $600 million in assets from FTX founder Sam Bankman-Fried: Court filing

He added that was fully regulated in the UK, EU, US, Canada, and Singapore and said that a full, professional audit was underway—though it might take 30 days or more since serious audits “don’t operate on crypto speed,” he caveated. Marszalek also took the opportunity to reassure investors about’s accounting practices more broadly. Wall Street Journal, as investors recall the all-too-recent FTX collapse. You may change your billing preferences at any time in the Customer Center or call Customer Service. You will be notified in advance of any changes in rate or terms.

“What the crash did was prompt a kind of run on the bank. People panicked,” Yaffe-Bellany said. “They thought that their cryptocurrencies were in danger, and they moved to withdraw everything that they deposited in Celsius, and that’s what kind of exposed the kind of shaky foundations of the whole company.” “Impact x Nightline” takes a closer look at the chaos throughout the industry, speaking with executives at some of the biggest crypto companies, top officials at regulatory agencies, and the regular customers who suffered from the collapse.

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The parallels with the dot-com boom and related bust are worth remembering. Both industries saw huge growth in investment and valuations based on seemingly impossible promises of future capability. Back in 1999, about $350 billion in digital online transactions occurred and most of that was using legacy B2B systems such as Electronic Data Interchange , not consumer e-commerce from a web browser. Bold predictions made at the peak of the dot-com boom by major investment banks, academics and forecasting firms said that between $4 trillion and $6 trillion in online commerce would take place annually by 2005. In fact, total e-commerce (of the consumer web-browser kind) reached $105 billion in 2005. No surprise that market valuations plunged and many of the generously funded companies involved went bust.

Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Many investors are worried about the impact on their crypto holdings, so if you’re feeling nervous right now, you’re not alone. Crypto prices are down across the board after FTX’s implosion. Stay on top of crypto news, get daily updates in your inbox.

And when you have situations like you’ve had in the past couple of months, where companies have taken on too much risk or haven’t been playing by the rules, that’s when regulators come in to try to help establish rules. As you mentioned, novice traders, amateur traders have suffered seismic losses, some people losing it all they put in a ton of money, because they were looking for, you know, quick sizable returns, and the timing of it. So, you know, this meant that they lost a lot of money and they lost it quickly. “Bitcoin hype worse than ‘tulip mania’, says Dutch central banker”. Under the approved measure, the original blockchain will split off and be known as Terra Classic, while Luna, which plunged close to zero this month, will be renamed Luna Classic with the ticker LUNC.