Börsen-Zeitung / Crypto in the eye of the hurricane / Comment on the outlook …

Frankfurt/M. The collapse of the FTX crypto exchange continues to send shock waves through the market.
The broker Genesis is in trouble, the lender BlockFi, the investors are returning
promises to lend cyber currencies, had to file for bankruptcy – and in
of the old week, the mining giant Core Scientific escaped one of the
largest listed crypto companies in bankruptcy protection.

Miners under pressure

For the company, the falling crypto prices and the rising ones
Energy costs a devastating combination. Because bitcoin mining is on
extremely power-intensive proof-of-work consensus mechanism. Also
numerous other miners are guessing, according to Bloomberg analysts
Intelligence is under pressure in the current environment and both are selling their equipment
as well as their bitcoin reserves at a record pace.

In fact, the mining difficulty is a measure of
Processing power spent on mining new bitcoin, down as much as it has been since
barely a year and a half, which also points to the miners’ liquidity problems
indicates. However, analysts believe that the miners are now so large in volume
Bitcoin stocks have decided that an end to the sell-off is imminent.
In the past, such developments have repeatedly seen price increases
followed.

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Data from the futures market is also used by observers as indications of a reversal.
Because according to “Commitments of Traders” reports from the US derivatives regulator CFTC
are hedge funds’ net positions in Chicago Bitcoin futures
The Mercantile Exchange has climbed out of deep negative territory and is closing in
neutral level. The predominance of short versus long positions
thus decreasing – a trend that will continue during the turmoil after
FTX crash continues. Meanwhile, the asset managers’ net positions
fell less than hedge funds rose in December
there is even a small one for the asset managers until the middle of the month
An increase of $140 million.

On the one hand, the development in the net positions can be seen as a sign of this
suggests that after the Bitcoin price pullback since late March, there is now a bottom
is reached. On the other hand, investors should note that the increases in
the hedge funds are smaller because the managers have large volumes
Long positions would have been taken – but rather that the open interest
bitcoin has fallen significantly since the spring.

This should give crypto enthusiasts pause for thought as it represents open interest
an important indicator of institutional adoption. The decline in
open futures positions thus indicate that the narrative, established
Financial institutions make decisions with a long-term focus and let themselves
therefore not deterred by short-term market turbulence, does not work.

The latest developments in the FTX case should not contribute to that
Increase trust in digital assets. Sam Bankman Fried, founder of
Trading platform, is in the Bahamas after his arrest and his
Extradited to the United States on $250 million bail.
Caroline Ellison, managing director of Bankman-Fried’s trading firm Alameda, and Gary Wang,
former technology director at FTX, has since
pleaded guilty to criminal charges. At the same time, investors are waiting
whereupon other victims of the crash will be revealed – the hurricane
was soon to continue to rage unabated.

(Börsen-Zeitung, December 24, 2022)

Here is the link to the article: https://www.boersen-zeitung.de/kryptomarkt-im-auge-de
s-hurricane-264c8068-82b0-11ed-88a4-f95b7fe2b116

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