Coinbase analysts forecast prolonged crypto winter due to FTX collapse

FTX collapse undermined investor confidence and could prolong the crypto winter until the end of 2023. Coinbase analysts hold this view.

All this means that remediation will take time and the winter may take a few more months to work through the system. END/

Read the full report here 👇 https://t.co/1rt9tkluNh

— Coinbase Institutional (@CoinbaseInsto) November 15, 2022

Events around FTX have led to deleveraging of short positions and the exit of large buyers, increasing vulnerability of the crypto market. Not ruled out are “second-order effects” that could affect clients and counterparties of the bitcoin exchange and its affiliated Alameda Research.

In addition to FTX-related bankruptcy proceedings, investors will continue to monitor interest-rate dynamics, Coinbase said.

If macro conditions improve, the market could recover from the shock within a few months. Analysts doubted an improvement in the macro backdrop in January after the dollar’s current softness in light of encouraging inflation data.

Liquidity is expected to remain poor through year-end. Stablecoins’ dominance rose to 18% of total market capitalization, which had fallen from $1 trillion at the start of the month to $800 billion following the FTX collapse.

The combination of increasing hash rate (which increases difficulty), rising energy costs and lower prices has led to increasingly strained conditions for Bitcoin miners, the report says.

BlockFi will file for bankruptcy after the start of FTX restructuring, according to WSJ.

Earlier, Binance CEO Changpeng Zhao compared the current industry situation with the 2008 financial crisis. He said that in the coming weeks even more companies could fail.

Prior to Zhao, Circle co-founder and CEO Jeremy Allaire compared the problems at FTX with the Lehman Brothers collapse, which sparked the 2008 crisis.

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