After Bitcoin's worst week in five months, here's what crypto analysts are saying

Bitcoin (BTC) fell 22% in the seven-day period to Sunday, and analysts are struggling to gauge the outlook — for digital asset markets as well as possible policy ramifications amid annus horribilis for the blockchain industry, fresh from FTX scandal.

As the new week begins, the market is still searching for a bottom: The CoinDesk Market Index (CMI) is down 0.8% in the last 24 hours.

Here is an excerpt from the comment:

  • Sean Farrell, Head of Digital Asset Strategy, FundStrat: “Over the past six months, we have witnessed the unraveling of a web of leverage that has entangled the crypto space. It started with LUNA/UST seemingly resolved in the 3AC unwind, only to find that SBF now appears to have been insolvent as well … We think it is appropriate to wait for lower levels as there is good reason to believe that there will be other losses that could lead to forced sales or at the very least bad title risk.”

  • Joe DiPasquale, CEO of BitBull Capital: “The past few days have seen the space rocked by the collapse of the SBF empire, and as expected, although traditional markets are showing some strength, BTC and crypto have taken a hit due to bad sentiment. Although BTC has settled around $16,000 for now, the extent of the damage to other companies, funds, exchanges is still unknown and may come to the fore in the coming weeks. As before, we believe that BTC below $20,000 is an attractive area for long-term accumulation, but we also remain cautious until the current situation is satisfactorily resolved and sentiment appears to be beginning to move towards relative normalcy. Specifically, the past few days have seen a significant drop in exchange reserves for BTC and stablecoins, indicating a lack of confidence and a preponderance of fear in the market. We will be watching for signs of a return of confidence among the masses as a positive indicator.”

  • David Duong, Head of Institutional Research, Coinbase: “The relative stability in the crypto market of recent months has been broken…. We have seen broader market volatility despite some positive macro developments for risk assets in general…. It is still emerging which counterparties may have been lending or interacting with FTX or Alameda and what exactly are those liabilities….BTC may not only retest the 2022 lows but also touch the $13K level…We think has $13.5K backing.”

  • Arcane Research Bulletin: “This situation is a mess… One of the biggest crypto companies in the industry was playing with customers’ money. Shame on the industry, but it also reminds us what an unregulated Wild West this still is. The contagion from this will undoubtedly develop in the coming weeks.”

  • Galaxy Digital Newsletter: “It is likely that FTX depositors who still have funds held on the exchange will be considered unsecured creditors and face a lengthy legal process.” While several firms have proactively and publicly offered some transparency about FTX exposure, the overall exposure of the industry remains unknown at this time… A huge amount of money is at stake (perhaps lost), but the impact of the FTX collapse is even more augmented by the exchange’s extensive marketing efforts and the prominence of Sam Bankman-Fried… The magnitude of his advocacy and the extremity of his debacle cannot be understated and will have a long-lasting ripple effect in Washington on crypto politics.”

  • GSR Weekly Crypto Summary: “Sadly, 2022 in crypto was not about the potential of crypto, but rather about leverage, greed, fraud and lack of transparency – the same things that the people involved accused TradFi of and vowed to change.”

  • Pantera Capital Blockchain Letter: “In the short term, there will be pain for those who lost funds held on the FTX exchange. More broadly, we expect further price volatility across the crypto ecosystem as contagion fears cause asset holders to adjust their portfolios. FTX-related assets (Solana and projects built on top of it, Aptos, etc.) are likely to be hit the hardest…. The episode is also likely to be a drag on adoption as some retail users who are losing funds are choosing to leave the space, and others who may have joined earlier fear being left out. We expect institutions that were previously wary of the space to deepen their skepticism.”

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