Bitcoin is headed for gains this week despite FTX’s sudden collapse
- Bitcoin has climbed over 4% since Monday.
- It has held steady this week despite investor fears that FTX’s implosion will trigger a selloff.
- Speculation that the Federal Reserve may begin easing its tightening campaign next month is supporting bitcoin’s price, an analyst told Insider.
Bitcoin is on course to end the week trading higher despite the collapse of Sam Bankman-Fried’s crypto exchange FTX.
The biggest digital asset by market capitalization has climbed 4.47% since Monday’s opening bell to trade at just over $16,800 at last check.
These gains come despite ongoing revelations about FTX, which filed for bankruptcy last week after suffering a major solvency crisis.
In a Chapter 11 filing published Thursday, new FTX CEO John Ray III claimed the group’s corporate governance was worse than Enron and said it only had $659,000 in crypto holdings.
But after crashing 23% last week, bitcoin has rebounded to outperform both the S&P 500 (down 0.25%) and the Nasdaq (up 0.28%) at Thursday’s close.
Bulls say FTX’s sudden collapse could be bullish for bitcoin’s price because it’s seen as a decentralized asset that doesn’t rely on intermediaries like Bankman-Fried’s exchange.
“It means you don’t have to rely on the FTXs of the world,” MicroStrategy Chairman Michael Saylor told Fox Business’ ‘Making Money with Charles Payne’ on Tuesday. “So yes, I’m a big believer because I think that while in this case crypto may have been the problem, bitcoin is still the solution.”
Bankman-Fried “may have made a million bitcoin maximalists with this crash,” he added.
Others argue that the token has benefited from lower-than-expected inflationary pressures in October, which could allow the Federal Reserve to veer away from the outsized rate hikes it has implemented at its last four meetings.
“Obviously there’s a hangover from the problems with FTX,” CoinShares head of research James Butterfill told Insider in a recent interview. “But I think there are a lot of potential positive forces around a softer Fed now, with some even expecting a 25 basis point rate hike in December.”
The Fed’s aggressive rate hikes have crushed cryptocurrencies and other risk assets this year, with central bank tightening making borrowing more expensive and limiting investors’ cash flows.
Bitcoin is down 64% year-to-date and 76% from an all-time high of just under $69,000 it reached in November 2021.
Read more: FTX’s collapse shows Fed tightening is crushing speculative assets like crypto – and don’t expect a pivot anytime soon, says UBS
