Bitcoin (BTC) Jumps Although Trader Remains Cautious After FTX Collapses
The crypto market has been rough this year, with more than $2 trillion wiped off its value since its peak in November 2021. Cryptocurrencies have been under pressure following the collapse of major exchange FTX.
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Bitcoin jumped higher on Wednesday, bouncing off the previous day’s two-year low, although traders remain wary of the possible contagion from the collapse of cryptocurrency exchange FTX.
The world’s largest digital currency rose more than 5% to trade at $16,497.19 around 3:34 a.m. ET.
“We’re bouncing off a support level, which is quite expected as we’ve been quite oversold in the last week or two,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.
“However, this move does not indicate any bullishness yet … We may see a bearish bounce here, looking at resistance around $17K, before further downside targeting $14K,” he added.
Markets remain on edge after the fall of FTX, a one-time $32 billion empire that was one of the world’s largest cryptocurrency exchanges.
Investors are worried there could be contagion from the FTX fallout and are looking for signs of other companies or entities that may have been exposed to the exchange, which was founded by Sam Bankman-Fried.
“In general, markets have been jittery post-FTX, expecting further contagion from parties related to FTX,” Ayyar said.
FTX can have more than 1 million creditors. The company owes $3.1 billion to its 50 largest unsecured creditors alone. However, FTX’s various entities worldwide had only about $1.24 billion in cash as of Nov. 20, according to a court filing published this week.
Bankman-Fried, who stepped down as CEO of FTX earlier this month, has been trying to broker a deal from his home in the Bahamas to save the exchange, a move that seems highly unlikely.
Meanwhile, Justin Sun, a high-profile crypto entrepreneur, said on Tuesday that he and his associates were considering whether to buy some of the assets from FTX.
Cryptocurrency ether also bounced on Wednesday, trading up more than 7% to $1,161.89 at 3:42 a.m. ET.
Ether in particular was under pressure after hackers stole around $477 million in cryptocurrency from FTX.
The hackers then converted a huge amount – around $280 million – into ether before dumping the holdings into another cryptocurrency as they began to launder the money. That sale put pressure on ether.
It’s been a tough year for crypto with the industry plagued by collapses, liquidity issues and bankruptcies. More than $1.3 trillion in value has been wiped off the entire cryptocurrency market this year.