FTX collapse in November has a significant effect on the entire crypto market, in fact, many opined that it would take longer than this for the crypto market to fill up the space, but the crypto market has proven otherwise.
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FTX Effect on Crypto Market Neutralized
Prior to the collapse of FTX, Bitcoin was trading around $21k, following the downfall of FTX, Bitcoin and the entire crypto market cap dropped by a significant percentage. Many are of the opinion that it would take a very long time for the crypto market to recover from the effect of FTX downfall, probably because the exchange is the second largest crypto exchange in the world, only second to Binance, by trading volume.
According to recent data by Coindesk, Bitcoin was trading at $21,550 early Wednesday, the highest price it has reached since mid-September, 2022.
The producer price index (PPI) which is larger than expected could be attributed to the Wednesday surge in Bitcoin price.
The PPI dropped 0.5% last month, bringing the year-over-year rate down to 6.2% versus 7.3% previously. Market expectations had been for just 0.1% dip in December and a year-over-pace of 6.8%. The core PPI for December fell 0.1%, in line with forecasts, but the year-over-year rate fell to 5.5% versus expectations for 5.7%.
December retail sales plunged 1.1% as opposed to the forecasted 0.8% decline. Combined with a drop of 1% in November, this marks the first back-to-back 1%+ declines in monthly retail sales since the Covid-19 fear.
A review of traditional markets finds the 10-year U.S. Treasury yield down a whopping 16 basis points to 3.39%, its lowest since mid-September, and well below the current Fed Funds rate target of 4.25%-4.5%. This sort of “inversion” has typically been an excellent forecaster of a recession, or at least a sizable economic slowdown. Should that come to pass, it would surely mean easier monetary policy than currently forecast, a possible boon to risk assets, including BTC.
Bitcoin which was trading in the low $21k before the FTX debacle dropped to as low as $15k in the same month, BTC then, however, maintained a $16,500 price for a long time before the current rally in 2023.
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