Analysts at Bitfinex, one of the leading crypto exchanges, confirm the current decline for Bitcoin due to last week’s disturbing turn of events concerning the collapse of the FTX exchange and, consequently, also of its native token FTT.
Specifically, when FTT collapsed its price dropped all the way below $3, registering an impressive 85% drop. As a result, the crypto market went on high alert and all coins were affected.
In this bearish market phase, Bitcoin, the world’s first and most prestigious crypto, was no exception, recording declines of 10% and last week updating its price to $17,000, at its lowest since late 2020.
Bitfinex defines the state of play on Bitcoin after FTT
Bitfinex‘s latest analysis of Bitcoin’s collapse reads:
“Unsurprisingly, many coins are held in loss as we push through what may only just be the halfway point of the current bear market. The supply in loss is at a similar distance from the median supply, equivalent to the latter stages of previous bear markets.”
Thus, it is not a scandal that many coins, including Ethereum, maintain loss-making values in a bearish market phase such as the one that occurred after the implosion of FTX. The exchange, along with its native token FTT, represented a colossus within the crypto world
Therefore, if it collapses, it is normal that investor confidence in crypto will go down and the whole market will be affected. Furthermore, Bitfinex adds:
“The supply in profit is always rigid and a laggard, but it remains to be seen if the latest black swan event to impact the industry, the bankruptcy of FTX, can mark that sharp fall in supply in profit for BTC, where might witness a bottom formation with price consolidation at these levels. However, with the exogenous impact of the FTT collapse, it is likely that we may have an even longer downturn than the charts are currently predicting.”
Hence, the downward path for Bitcoin may not be over and, indeed, may be even worse than the charts predict.
Bitcoin’s price trend over the past week
Since the collapse of the FTT native token of FTX, Bitcoin has experienced several and somewhat worrisome price changes. Indeed, at first, as previously anticipated, BTC fell to its lowest since 2020, reaching as low as $17,000.
Prior to this phase, Bitcoin recorded a significantly higher price, reaching as high as $20,000 at the end of October. In recent days, we have seen a possible recovery phase on Monday.
In fact, one wonders whether Monday’s price action was merely a breather from the relentless selling pressure of bearish traders or whether a reversal is underway. Specifically, on Monday the price of BTC marked an uptrend for the first time in four days and ended the daily trading session at +$289.6.
However, the price of BTC lost more than 20% of its value last week, recording a price range in the last twenty-four hours between $15,000 and $17,000.
Whereas, BTC’s price range for the past seven days has been between $15 thousand and $20 thousand. So, over the past thirty days, the average price recorded by Bitcoin has been around $19 thousand, with a decline of 14% over the time period.
Currently, the price of Bitcoin registers +1.77% closing at $16 thousand, back in the green for the first time since last Thursday. However, this data still does not provide certainty of an imminent recovery for BTC following the market turmoil.
Can BTC be considered close to bankruptcy after the FTT affair?
Many might be wondering, especially the more inexperienced, whether Bitcoin is heading toward potential bankruptcy after the latest events, including the collapse of FTT.
In reality, those who are familiar with the history of the famous crypto know that Bitcoin has suffered even worse in the past, yet still managed to rally its price afterward.
Indeed, Bitcoin’s real fortune starts in 2017, when its price first reached $20,000, making what was then a new all-time high.
Bitcoin had undergone that surge following a large speculative bubble that took the price of BTC from $1,100 to $20,000 in less than twelve months. However, when the bubble burst the following year, Bitcoin’s price dropped precipitously, recording losses of 85% to $3,200.
Only in late 2020 did Bitcoin return to mark a price of around $20,000.
So, the big hiccup of the speculative bubble was not enough to bankrupt the crypto Bitcoin, although it took a full three years to return to peak price levels.
So while the recent November collapse may be reminiscent of the one that occurred in 2018, the latter had occurred at price levels three times higher than the collapse due to FTT.
In essence, one can remain fairly calm, as it is estimated that Bitcoin will not fail even in the aftermath of this difficulty.
What is Bitcoin halving and why is it important
The halving referred to Bitcoin is a cycle that occurs once every four years or so. The halving is an inherent process in the Bitcoin protocol and is characterized by the fact that it is immutable and predictable.
Halving is also what gives Bitcoin its deflationary nature, so it is of utmost importance because it is BTC’s only monetary policy measure. It literally means reducing by half, so referring to Bitcoin mining, it stands for reducing the reward for miners by half.
It is important to specify that the reward given to miners is the only existing way to create BTC. So, when we put Bitcoin’s halving in relation to what is happening to the current price of BTC and all the other collapses the coin has suffered in the past few years, one can be quite comfortable about Bitcoin not collapsing.
Indeed, the drop that is being talked about today and that was being talked about in 2018 happened even earlier in 2014, when another huge speculative bubble took the price of BTC from $13 to $1,100. This collapse ended with -85%.
And yet, again Bitcoin recovered and returned to update its price in a positive way. Nothing is certain, of course, and we cannot know exactly what will happen to BTC after the FTT collapse, as each situation is its own.
In any case, considering the halving and previous collapses of BTC, one can well hope that Bitcoin will mark a recovery this time as well, although we cannot estimate exactly how soon.