Cryptocurrency exchange FTX has gone from being one of the biggest cryptocurrency exchanges in the world to now being bankrupt. The recent changes in the crypto space, including the FTX collapse, will pose a threat to the entire crypto sector. The public may learn unfavorable lessons from this regarding where to invest, which could hurt the cryptocurrency market.
You can imagine the speech you prepared to persuade a crypto novice following the recent FTX collapse news in the media to invest in crypto. It is indeed going to be an almost impossible mission.
Read on to learn how events such as the FTX collapse would impact investors and traders.
How the FTX Hacking Ended Any Hope of a Comeback
Investors and affiliates are still troubled by the news of FTX’s demise, but recent events keep the crypto market on the brink of falling apart. After filing for bankruptcy, the cryptocurrency exchange says the system got hacked, with over $600 million missing from the exchange wallet, increasing the already intense pressure in the sector.
Nobody can predict what will occur next, but even though bankruptcy proceedings and untangling may take some time, the losses are open for the masses to count.
Following the hack, several users claimed their wallets had been empty as of Friday evening. And this comes after consumer withdrawals on FTX.US were momentarily suspended.
The reality is that many clients will probably never recover their losses, and even if they do, it won’t be enough to replace the money or assets they had before the crash.
Since this has already occurred, the entire incident will leave these investors with a mental scar.
The $400 million that Crypto.com accidentally transferred to the wrong account on November 13 presents another risk. This is another issue exacerbating the difficulties the crypto space is facing. Investigations into the platforms are in progress, and suggestions for potential operational control follow. This announcement may be what sends the prices of several cryptocurrencies plunging.
5 Possible Things That FTX Collapse Will Cause in the Crypto Space
The abrupt FTX collapse raises questions about the viability of cryptocurrencies, the future of the broader crypto industry, and the potential impact on conventional financial markets.
1. Aspiring Businesses and Governmental Organizations Will Lose Their Trust in the Crypto Market
The recent event will force companies that had plans to integrate cryptocurrencies into their platforms to cancel those plans, which will be its most noticeable immediate effect.
Investors may be discouraged from using cryptocurrency exchanges after the FTX fiasco. Many banks or traditional businesses researching the market are likely to view any offer related to cryptocurrencies with increased skepticism.
2. Bitcoin and Other Altcoins Price Might Dip Even More
Following the failed bid to save FTX, Ethereum lost nearly a third of its value, and Bitcoin fell below $16,000 for the first time since November 2020.
The impact of the FTX collapse may be felt widely across the entire cryptocurrency market. This is because cryptocurrencies and exchanges exposed to FTT or FTX may experience declining prices and financial difficulties.
As a result, Bitcoin and other altcoins may continue to be impacted in the future as the reactions of influential financial institutions and regulatory bodies may cause the further collapse of crypto prices.
3. Tradable Coins Will Lose Value
Global investors continue to be drawn to the allure of cryptocurrency trading and investing. Many cryptocurrency day traders who use trade bots like bitsoft360 may still be making trades. However, the coins used for these trades will experience a decline in value.
Many pessimistic crypto insiders worry that a vicious downward spiral in the value of crypto assets is about to start, harming both individual investors and the entire industry for years to come.
4. Potential Investors May Change Their Minds, and Crypto Holders May Withdraw Their Funds
Potential investors may be scared off by the recent problems in the crypto space, and holders may quickly withdraw their assets out of concern for future liquidity. It is going to trigger a lot of caution from investors and traders.
One of the largest cryptocurrency exchanges in the world, FTX, filed for bankruptcy, costing thousands of investors their money and trust.
5. The Regulatory Commission May Impose Strict Laws
Regulators and conventional financial markets may be affected by the collapse of FTX, one of the biggest exchanges. Countries may swiftly impose restrictions on cryptocurrency operations within their borders to safeguard the economy from a potential financial collapse.
Legislators and regulators are looking into what caused FTX to collapse, but no one knows what findings they will make. After the investigation, whatever decision they make could affect other cryptocurrency exchanges.
The FTX case might result in stricter laws that will affect crypto industry innovation and expansion.
FTX.com’s collapse, according to some media reports, will have an impact on the ecosystem of digital assets and intensify regulatory pressure. Although the regulators’ plans are unknown, the future of cryptocurrency is in jeopardy due to the assets lost in FTX.
However, after the FTX meltdown, institutional and retail investors will start to lose faith in crypto exchanges.