FTX CEO Sam Bankman-Fried (SBF) believes that the worst crypto winter is over as long as there are no macro shocks.
If the Nasdaq drops 25%, interest rates continue to rise, and there is a two-and-a-half-year recession, the price of bitcoin from $10,000 to $15,000 is a fait accompli, SBF warns. The SBF says that if that happens, there could be more devastation.
SBF’s FTX has weathered the better part of a somewhat cold winter that left some companies out in the cold and exposed. Voyager Digital, Celsius, Babel Finance and Three Arrows Capital have had a shock freeze that has left some investors desperate to get back the money they deposited.
SBF says the market defeat is not over yet
Bankman-Fried believes that a small part of the trajectory of the cryptocurrency market has yet to happen and that it will be manageable. The path started after the collapse of the algorithm-backed stablecoin TerraUSD, a type of cryptocurrency linked to fiat currency using reserves or algorithmic means.
The founder of Frax, a partially backed stablecoin and partially algorithmic, believes that a collapse of another stablecoin is unlikely in the current crypto winter. By holding offshore assets as collateral, this is “literally impossible,” Sam Kazemian told Be[In]Cryptography in an exclusive interview.
The SBF said that the winter was necessary to liquidate those who invest in cryptocurrencies without deliberately considering the actual value of the asset. He says this kind of “unwarranted” thinking only works during periods of market euphoria.
SBF has poured money into troubled crypto companies in what it says is an effort to protect client assets and prevent the negative effects of correlated lending from spreading. Plus, he said, FTX looked at making deals that weren’t disastrous but aren’t perfect either. This spending spree by FTX has led to comparisons to the roles played by banks such as JPMorgan Chase, which acted as lender of last resort to banks during the 2008 financial crisis.
One deal that FTX and SBF saw as favorable was BlockFi, for which it extended a $400 million credit line as the lender struggled to meet liquidity demands. She has the option to buy the company for $240 million.
In May, SBF bought a 7.6% stake in Robinhood Markets as the brokerage’s share price took a hit in the spring. In addition, crypto lender Voyager Digital has lent $200 million and 15,000 Bitcoin. The company used $75 million, then declared bankruptcy in May 2022.
Bitcoins of up to 100 thousand dollars you pay
Speaking of Ethereum, SBF has refrained from making any price predictions associated with the upcoming merger. Vitalik Buterin said he does not expect any Proof of Work forks to disrupt a consolidation that could see the Ethereum consensus layer change to Proof of Stake. He added that he hoped people would not lose money.
Regarding bitcoin, SBF’s sentiments are cautiously optimistic. He believes that a greater regulatory transparency environment combined with a price recovery will help bitcoin’s rise to higher levels. However, $100,000 might be a bridge too far.
At the time of publication, the price of bitcoin is $23,172.
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