Cryptocurrency markets have been slammed by the sudden bankruptcy of FTX. But amid the carnage, some big traders—whales—were buying. Bitcoin, the largest crypto, was plumbing two-year lows at $16,600 on Friday—down from some $21,000 before FTX’s woes became public and roughly $69,000 in November 2021, the high. “The crypto world is still [being] rocked by FTX, and traders are still in shock,” says Naeem Aslam, an analyst at broker AvaTrade.
Some bargain hunters stepped in, betting on Bitcoin as a classic distressed asset play. “Many Bitcoin whales have chosen this time of panic to accumulate, as the number of addresses with more than 10,000 Bitcoin exploded over the past week or so,” notes Marcus Sotitriou, an analyst at digital asset broker GlobalBlock.
At recent prices, 10,000 Bitcoin would be worth almost $170 million, making the whales influential market players, and potential long-term holders. They may be high-net-worth investors or crypto-native hedge funds, though it’s less likely institutional investors are taking the plunge, he adds. Still, it’s likely that most institutional and retail investors will wait to see what markets and regulators do.
Still, buying the dip looks risky. FTX’s collapse raises fundamental questions about the future of crypto, from the role of unregulated exchanges and brokerages to how tough regulation will be. Bets seem centered on Bitcoin, the closest thing crypto has to a blue-chip asset. Other tokens have been hit harder. Alt-coin Solana, for one, has lost nearly $9 billion of market cap as its token plunged 66% in price. Forced selling of more tokens, including Bitcoin, may be coming as the fallout from FTX spreads.
