Federal Reserve (Fed) Chairman Jerome Powell released a dovish signal in his speech on Wednesday, and may slow down the pace of interest rate hikes as soon as December, encouraging Bitcoin to rise above $17,000 and hit a two-week high, but experts He said that the aftermath of FTX’s bankruptcy is still hitting the market, and this wave of rebound may not last long.
Despite the recent bad news in the industry, according to CoinGecko data, in the past week, bitcoin and ethereum rose by 3.2% and 8.7%, respectively.
The cryptocurrency industry has been in turmoil following the bankruptcy of FTX, and market fears of knock-on effects have intensified. So far, lending institution BlockFi has filed for Chapter 11 bankruptcy protection and admitted to having “significant exposure” to FTX and its sister trading firm Alameda Research; brokerage firm and trading firm Genesis have also hired financial and legal advisors to seek to avoid Option for company bankruptcy.
Bitcoin has lost two-thirds of its value since November 2021, and despite a slight rebound, experts believe the cryptocurrency industry continues to take a beating.
Caleb Franzen, founder of research firm Cubic Analytics, said:
I would also like to see a brief period of euphoria followed by a strong and swift rebound, however, the headwinds of cryptocurrencies, as well as the headwinds of traditional markets, are still difficult to dissipate.
He pointed out that even if the Fed slows down the pace of rate hikes, U.S. monetary policy will remain tight for some time. The decline in liquidity will “continue to expose overleveraged companies, bad actors and ‘naked swimmers,'” he added.
Franzen believes that all asset prices are currently facing headwind pressure, and the FTX storm has begun to spread, making the cryptocurrency market particularly weak.
As bitcoin shrugged off news of BlockFi’s bankruptcy earlier this week, a short-term bottom may be in place, said Yaroslav Shakula, chief executive of venture capital studio YARD Hub. He continued:
However, if the chain effect caused by FTX further spreads to other large cryptocurrency exchanges or funds, this wave of rebound will be unsustainable, and the general direction will still be a bearish trend.