FTX CEO Sam Bankman-Fried announced the Fed was fueling a cryptocurrency meltdown. Over the past few weeks, cryptocurrencies have collapsed. The wealthy businessman told the media that the Fed is raising interest rates to counter excessive inflation.
The billionaire noted that central banks are “in the middle of trouble and trouble.” So he understood the difficulty of his task. However, he said the Fed’s decision in the next few months would significantly impact his business outlook.
Earlier this week, Fed rose for the first time since 1994. The financial markets are becoming increasingly nervous, and cryptocurrencies are in collapse mode. “The market was scared,” Bankman-Fried said, “It scared the rich.”
FTX is a company that helps investors trade digital currencies through its apps and websites.
The most famous cryptocurrency, Bitcoin, fell by almost 20% last week. In addition, it continues to fall over the weekend and is currently less than half the value at the beginning of the year. Other digital currencies fell sharply – ether lost more than 70% of its value in the same time frame.
Bankman-Fried worried about the impact of the economic downturn
There are concerns about how the recession will affect new investors. The crypto industry has recently launched a comprehensive campaign to attract amateur investors. In addition, they also aim to raise brand awareness. By 2021, the event had seen the total value of cryptocurrencies soar to $3 trillion.
Most new investors enter the cryptocurrency business because of their incredible attention. According to a survey in December, one in four investors owns BTC, and more than half (55%) have started investing in the past year.
Some even put their money into crypto lenders. However, some lenders blocked their clients from getting their money back last week. The turmoil has raised concerns about a whole financial system collapsing.
Cryptocurrency lender Babel Finance paused bitcoin purchases and withdrawals on Friday. Another lender, Celsius Network , stopped withdrawing and transferring money. The company’s CEO stated that the cryptocurrency industry is going through a difficult time. They must act to stabilize liquidity and operations, he said. In addition, they need to protect and maintain their property. However, Celcius’ move has attracted the interest of several regulators.
Cryptocurrency regulations can come from the economic downtrend
Another crisis is sweeping through a crypto-focused hedge fund called Three Arrows Capital. It has invested heavily in TerraUSD and Luna, both of which have failed recently. The fund is said to have failed to respond to margin calls from lenders this week, making it unable to repay its creditors.
According to Bankman-Fried, this effect could affect the legislation on cryptocurrencies. He believes the government will closely monitor the leverage of crypto businesses. Cryptocurrency businesses, meanwhile, are looking to protect themselves.
Investors such as Bankman-Fried and large companies such as FTX, recently valued at $32 billion, have helped limit losses as trust issues arise.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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