The head of the FTX bitcoin exchange, Sam Bankman-Fried, expects demand for bitcoin to grow amid economic instability in Eastern Europe associated with a military operation in Ukraine and the devaluation of national currencies.
1) Some thoughts on crypto, Ukraine, and stocks
— SBF (@SBF_FTX) February 24, 2022
“War is usually bad. What is BTC supposed to do here? On the one hand, if the world is getting worse, people will have less free money. In effect, the sale of BTC—along with stocks, etc.—is paying for the war. On the other hand, the events destabilize the currencies of Eastern European countries and the financial systems of the region as a whole. People may show interest in alternatives. If you were in Ukraine now, where would you keep your money?”, he commented.
Bankman-Fried expected a sharper decline in bitcoin due to the actions of algorithmic traders. He pointed to the increased correlation between digital assets and stocks in light of the Fed’s plans to tighten monetary policy. He estimated the corresponding coefficient at 0.8%, and beta in — 4 (in other words, if the S&P falls by 1%, Bitcoin should fall in price by 4%).
In the current circumstances, the same category of market participants, with the stock market weakening by 4%, expected a 16% reduction in the price of digital gold.
At the same time, fundamental-oriented investors can buy back the decline. This is how Bankman-Fried explained the stop of Bitcoin quotes “halfway to the daily -8%”.
As another reason, he named the possible beginning of a new cycle. In addition, the FTX CEO did not rule out that all his previous arguments are untenable, and the whole point is the deterioration of liquidity. It is because of this that traders could refrain from buying volatile assets.
“Anything can happen, and I don’t know what. We have probably entered a new mode compared to the previous year and a half. Time will show”he concluded.
Recall that in January, Bankman-Fried called on regulators to create a single set of rules for cryptocurrencies.
Earlier, the CEO of FTX said that the cryptocurrency industry needs to solve a number of problems in order to become mainstream. Among the main challenges, he named scalability and regulation.
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