No matter how long you’ve been in the cryptocurrency space, no news or event has been more bearish than the collapse of FTX. Maybe there’s some recency bias from your author’s perspective, but neither Mt. Gox, the 2018 bear market, nor the Covid Crash felt as ugly as crypto does now in late 2022. 2022, in general, has, thus far, been the worst year from a ‘bad news’ perspective.
Fear, Uncertainty, and Doubt (FUD) is massive. $10s of billions is seemingly wiped out, and millions of creditors are affected. Institutions and individual investors have been equally hit by 2022’s nightmare of one collapse after another. But what are the ‘whales’ doing? What is Big Money up to? What are the institutions, the major fund managers, the top dogs – what are they doing during this crypto-pocalypse.
They’re practicing an old Wall Street phrase often quoted by Warren Buffet: “fearful when others are greedy and greedy when others are fearful.”
Is Ark Invest’s ($ARKK) Cathy Wood worried about FTX’s collapse on Bitcoin ($BTC.X)? If she is, she has an odd way of showing it. Ark picked up 315,259 shares of Grayscale’s GBTC ($GBTC) on Monday. Why not Bitcoin itself? No idea, but it might be because GBTC is trading at a 40% discount to the Bitcoin it’s holding.
What about one-time major crypto hater turned major crypto bull Shark Tank’s, Kevin O’Leary? Mr. Wonderful was a paid spokesperson for FTX and told Market Insider that his investment in FTX, “I’m writing that all down to zero.” He even tried to round up other investors to help bail out FTX – but when regulators started circling, he backed out.
Is he done with crypto? Nope. He’s still in it and transferred his assets to the Canadian crypto exchange WonderFi.
What about the great VC billionaire Tim Draper? He is famous for his 2018 prediction of Bitcoin hitting $250,000 by the end of 2022 or early 2023. Does he still feel that way after the FTX crypto contagion? In an interview with Cointelegraph, Draper said, “No change in the price prediction. Still $250,000 by early next year.”
Regarding FTX’s collapse, Draper continued saying, “FTX was centralized, reliant on a single founder,” the billionaire investor stated, referring to FTX creator and former CEO Sam Bankman-Fried. “When a currency is centralized — a central bank for instance — it has a single point of failure, and can also be manipulated.”
Taking a more optimistic approach, Draper made a case for FTX’s collapse as being bullish for Bitcoin:
“I think this fiasco is going to bring on a lot more Bitcoin maximalists. Note that your money is not secure in a centralized system, whether crypto or fiat.” 🧠