- According to a study from Messari, the downfall of FTX caused a 25% swing that affected other centralized institutions
- From the FTT liquidation to the FTX bankruptcy filing, macroeconomic events such as inflation and Fed announcement caused lesser impact
- Research also showed that the Federal Reserve sees Bitcoin becoming less sensitive to macro backdrops
The 2022 crypto winter was a sour sight to behold. It singlehandedly became the weakest period for cryptocurrency, provoking the trust of investors and large institutions. FTX, a well-known centralized crypto exchange, went from hero to zero in just a few weeks to cap the year off for the bear market. Its downfall spearheaded the Bitcoin (BTC) price drop last November. Despite black swan events such as US Federal Reserve’s price hike, new taxation rules, and ongoing inflation, the crumble of FTX and Alameda Research affected BTC’s price the most.
According to crypto intel service Messari, FTX influenced BTC the most, with a 25% swing down during the fourth quarter of 2022. The collapse caused a domino effect on the rest of the crypto-based companies and the trust of potential buyers and existing investors on all exchanges. The price decline resulted in a 64% decrease in performance for BTC.
BTC showed signs of recovery since December 16, going from $16,200 to $24,000; many say that it is still too early in 2023 to tell if the crypto market’s bearish atmosphere has ended or the recent surge is just a bull trap for new buyers.
Bitcoin Getting Stronger Against Macroeconomic Events
From Fed funds to fears of recession, BTC showed more decisive price action than the best shares in the stock market. The Messari report stated that specific macro events, such as the Fed’s 75 bps hike and ongoing sanctions from different governments, only slightly damaged the BTC price.
However, anything correlated to the events of FTX saw giant price leaps. When Binance announced that it would liquidate its share of FTT tokens (local tokens of the FTX exchange), it brought down BTC from more than $21,000 to less than $18,000. Following this event, FTX filed for Chapter 11 bankruptcy, and its CEO, Sam Bankman-Fried, stepped down. These announcements ultimately led BTC to reach its lowest point of barely over $16,000.
Yet, when the US Federal Reserve declared that a 50 bps hike would take place, it did not pull down the price as much as the FTX issue. Even the downfall of Terra Labs last May made more impact than any black swan in the economy. Contrary to all the adverse reports on crypto, alongside FTX and Terra headlining the worst financial disasters, BTC made the best bull rally in January 2023.
After it was confirmed that FTX recovered $5 billion worth of crypto, the prices slowly broke previous resistance prices. For example, Solana (SOL) went from $7.96 to an astonishing $26 in only a month, making a three-time price increase.
Although January started as an excellent step for crypto, many barriers still exist. As of writing, BTC fell from $24,000 to $21,000. It is still uncertain if the current price is the newest support line or if it will go lower again to $16,000 or worse. From a more bullish perspective, it may rally up to $29,000 before needing time to recover to a new journey to reclaim the previous all-time high of $69,000.
