According to FTX CEO Sam Bankman-Fried, the Fed is pushing the crypto slump. Cryptocurrencies have been falling in recent weeks. According to the rich merchant, the Fed is boosting interest rates to counteract runaway inflation.
According to the billionaire, the central bank is caught between a rock and a hard place. As a result, he comprehends the mission’s complexity. Nonetheless, he indicated that the Fed’s choices in the coming months would greatly influence his firm.
This week, the Federal Reserve hiked interest rates for the first time since 1994. As a result, financial markets have been increasingly jittery, and cryptocurrency prices have plummeted. “markets are afraid,” Bankman-Fried said. “It even terrifies the wealthy.”
FTX is a company that uses its app and websites to assist investors trade digital currencies.
Bitcoin, the most well-known cryptocurrency, dropped about 20% last week. In addition, it continued to fall over the weekend. It is now worth less than half what it was at the beginning of the year. Other digital currencies have fared much worse, with Ether losing almost 70% of its value simultaneously.
Bankman-Fried is concerned about the impact of the slump
There are concerns about the impact of the slump on new investment. Recently, the crypto industry has launched a full-court press to entice inexperienced investors. They also wanted to raise brand awareness. By the end of the campaign, the total worth of cryptocurrencies had risen to $3 trillion.
The crypto industry has attracted a lot of new investors because of its high profile. According to a December study, a quarter of investors possess BTC, and over half (55%) started investing in the previous year.
Some individuals have even invested in cryptocurrency lenders. In the recent week, however, several lenders have prevented their clients from receiving their money back. Fears of a banking system-wide disaster have grown due to the chaos.
Babel Finance, a cryptocurrency lender, temporarily froze bitcoin redemptions and withdrawals on Friday. Another lender, Celsius Network, has previously blocked withdrawals and transfers. According to the CEO of the company, the crypto sector is going through a difficult period. He stated that they needed to act to restore liquidity and operations. They also needed to safeguard and maintain their possessions.
On the other hand, Celcius’ action has piqued some authorities’ curiosity.
The decline may have prompted crypto-regulation
Another crisis has engulfed Three Arrows Capital, a crypto-focused hedge firm. It invested heavily in TerraUSD and Luna, which have recently collapsed. According to reports, the fund also failed to make lender margin calls this week, leaving it unable to pay its creditors.
According to Bankman-Fried, the impact might have an impact on crypto law. He believes that the government would carefully monitor the crypto industry’s leverage. Meanwhile, crypto companies are looking for a means to safeguard themselves.
When there have been confidence issues, investors like Bankman-Fried and larger firms like FTX, which was recently valued at $32 billion, have helped reduce losses.
BlockFi, Crypto.com, and Gemini have all recently announced layoffs. In a memo to staff, the CEO of Coinbase, one of FTX’s major competitors, stated that the company is slashing its employment by around a fifth. Although the CEO of FTX has not announced any layoffs, he did remark in a Twitter thread that hiring has reached a standstill. The Bahamas are currently home to Bankman-Fried. FTX has just begun work on a new global headquarters in the city.
This week, Bankman-Fried was in Washington to meet with politicians and regulators. The risk to investors is causing a lot of anxiety. Furthermore, due to the crypto-crisis, politicians are focused on the larger financial system.