Crypto wrap: Amid a volatile week, experts want regulators to collaborate
Following a turbulent week in the cryptocurrency world, the experts want all the regulators to collaborate and the investors to educate themselves to understand the intricacies of the market.
“It was a highly volatile week for crypto markets; a series of seismic events led to the collapse of the second largest global crypto exchange, FTX. Combined with the continuing deterioration of the global macroeconomic conditions, signalled by the massive Tech lay-offs, the crisis at FTX triggered extreme churn in the crypto markets,” Parth Chaturvedi, crypto ecosystem lead at trading platform CoinSwitch said.
“Regulators worldwide must collaborate more with the industry to understand its intricacies and form a comprehensive outlook that doesn’t stifle innovation. Investors should proactively educate themselves as the space moves much faster,” Anurag Dixit, Founder of crypto asset management platform Kunji told Business Standard.
During the week, crypto market capitalisation fell below $800 billion with Bitcoin touching $15,750 and Ethereum falling below $1,100. On Friday, the price of Bitcoin was 15 per cent down and Ethereum was 20 per cent down as compared to what it was last week.
FTT, FTX’s token, was down over 86 per cent.
“This event [fall of FTX] reinforces how essential it is to maintain funds in a structured and secure way, with an amalgamation of hot and cold wallets,” Dixit added.
Binance CEO Changpeng Zhao announced that the largest crypto exchange in the world will start proof of reserve. He also asked other exchanges to follow suit.
“All crypto exchanges should do Merkle-tree proof-of-reserves. Banks run on fractional reserves. Crypto exchanges should not. @Binance will start to do proof-of-reserves soon. Full transparency”, he tweeted.
Solana- A crash away from the market’s eyes
FTX founder Sam Bankman-Fried’s Alameda was at the centre of the storm because most of its reserves were in the form of FTT. After the news broke, the value of the firm fell sharply, removing 94 per cent of Bankman-Fried’s wealth in a single day.
However, Alameda also has significant holdings in Solana.
“When concerns started to grow over the state of FTX and Alameda Research businesses’ finances, the crypto market began to speculate that Alameda might need to sell some of its SOL tokens to raise liquidity. The fears sent the SOL price tumbling – as traders rushed to get ahead of the selling pressure,” CoinDCX’s research team said.
The price of Solana rose 24 per cent on Friday but it is still down over 45 per cent as compared to last Friday.
What to expect?
“If BTC falls below the current level, the next major support would be in the $16,500 range. The second largest crypto, Ethereum, has also gained by 9 per cent, recovering above the $1,250 level as investors await the next price movement,” Edul Patel, CEO and co-founder of crypto index investing platform Mudrex said.
On Friday, as of 4 PM, Bitcoin was trading at $17,301 and Ethereum was at $1,271, according to coinmarketcap.
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