The mad bitcoin boom is over. After hitting $56,000 in November 2021, bitcoin’s price has been hovering around $20,000 for much of 2022, and even bottomed out in recent days, falling to $15,600. Unheard of for two years.
This new price drop has a very rational explanation. Binance, the largest online crypto-asset exchange, announced on Wednesday, November 9, that it is walking away from a deal to buy out struggling rival FTX. The day before, Binance had however explained that it had designed a rescue plan for the platform threatened with bankruptcy. The potential buyer explained this volte-face by “mismanagement of client funds and allegations of investigations by US agencies”, while the boss of FTX indicated that the company needed 4 billion dollars to remain solvent. At the start of 2022, the value of FTX was estimated at $32 billion.
According to washington postafter the Covid-19 pandemic, “investors fled riskier investments such as cryptos, and prices fell sharply” since the rise in interest rates. Bitcoin (and more generally cryptocurrencies) has also been experiencing a crisis of confidence for the past few months. Last May, the Luna token of the Terra blockchain collapsed when it was supposed to be pegged to the dollar, creating more insecurity among investors than ever.