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Investing.com – FTX CEO and Founder Sam Bankman-Fried (SBF) says the slowdown in the cryptocurrency market is due to aggressive rate hikes introduced by the U.S. Federal Reserve to counter rising currency. inflation.
However, he says he understands that the regulator has little choice in such a difficult situation. Still, the Fed’s aggressive actions mean that the trajectory of the cryptocurrency market will directly depend on central bank decisions in the months ahead. “Literally, the markets are scared. People who have money are scared.”
A broad impact on the crypto market
The overall capitalization of the crypto industry has dropped from $3 trillion in 2021 to less than $1 trillion. Major assets such as , , lost more than 60% of their value.
Meanwhile, companies like Three Arrows Capital, Celsius and Babel Finance are struggling with liquidity issues. Platforms like Coinbase (NASDAQ:), Gemini, Crypto.com among others have announced plans to downsize.
Contagion threatens
The CEO of FTX said his trading company, Alameda Research, would consider intervening to prevent a spread of contagion in the crypto sector.
He believes his companies “have a responsibility to seriously consider intervening, even if at a loss to ourselves, to stem the contagion.” According to him, the current liquidity problem is a problem for the whole sector, and the necessary should be done to save the ecosystem.