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- Since testing new 2022 lows, Bitcoin and Ethereum have rebounded but analysts are warning that there could be further pain down the road.
- According to a CNBC report, the crypto market price rally began around the time the U.S. released its October consumer price index (CPI) data showing a smaller-than-expected rise.
The price of the top two market-leading cryptocurrencies, Bitcoin (BTC) and Ether (ETH) has been staging a comeback in the past few hours after a two-day trend of sell-offs triggered by revelations of financial troubles at the FTX exchange.
BTC is trading at around $17,300, up 6.76 percent on the day, while ETH is trading around $1,200, up 8.78 percent per CoinMarketCap (CMC) data. According to a CNBC report, the crypto market price rally began around the time the U.S. released its October consumer price index (CPI) data showing a smaller-than-expected rise.
The CPI data has triggered speculation that the Federal Reserve Bank might slow down on rate hikes which have so far been hitting both the stock and crypto market hard.
Regardless, analysts have warned that the crypto market may not be completely out of the bushes as the FTX saga has not completely played out.
In an interview, Steve McClurg, chief investment officer at Valkyrie, told CNBC that the asset manager is still bullish for the long term. However, in the short term, Valkyrie is bearish as there may still be some leverage to be unwound in the market especially as many asset managers have funds stuck at FTX.
“We still think there is some leverage to be unwound… so not short-term bullish. Many asset managers have funds stuck at FTX. There will likely be a wave of redemptions on this news, causing a third wave of selling pressure. Long term, we are bullish and believe we are close to the bottom,” he said.
FTX is yet to find funding to fill the $8 billion liquidity shortfall
McClurg’s comment comes amid updates from FTX that shows that it is yet to find investors willing to backstop its liquidity troubles. Sam Bankman-Fried—CEO and Co-founder of FTX—has recently broken his silence on the situation with an apology to investors via Twitter promising to use any raised funds to first “do right by customers.”
Meanwhile, even more funds, asset managers, and investors have been likely to run into trouble as a result of their funds being trapped on FTX and Alameda. Crypto lender BlockFi has announced that it is pausing withdrawals.
The firm stated that it could no longer conduct its business as normal due to a lack of clarity on the situation with FTX. BlockFi previously reached a deal with FTX.us that would have seen it receive a $400 million line of credit with the option for the exchange to fully acquire it.
Similarly, Sequoia and Paradigm have marked down their investments in FTX to now be worth $0 according to a Forbes report.
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