To address the liquidity problem, Binance (1) has urged other participants in the cryptocurrency market to co-invest and establish an industry recovery fund.
In the meantime, this week saw a seven-month low in the connection between the S&P 500 Index and Bitcoin. After dropping about 75% of its value in a year, Bitcoin effectively lost the digital gold title.
After the unstable exchange's demise erased a sizeable portion of the market's overall value, the crypto sector still feels the effects of FTX's failure. The incident has shocked the financial world and reinforced many non-crypto investors' misgivings about whether digital assets should be included in traditional investments. their resumes. The way things are going, their response could be "no."
Plans for Binance's comeback
In response to the demise of FTX and the ongoing liquidity problem, ChangPeng Zhao (CZ), CEO of Binance, has proposed a solution. According to Zhao, the exchange would create an "Industry Recovery Fund" to lessen the effects of the market collapse.This fund will save only fundamentally sound projects that are experiencing financial difficulty. He also urged other professionals in the field to contribute to the cost of rebuilding the area.
BTC will make it, but might be a long winter
— Elon Musk (@elonmusk) November 14, 2022
Unexpectedly, Elon Musk, the new owner of Twitter, agreed with CZ's assertion that Crypto is not going away. He stated Although CZ's strategy to the backstop is to issue this call to action. Investors are dubious about a comeback rally due to the continued liquidity issue following the FTX meltdown. However, analysts predict a short-term rebound bounce, but the long-term picture is still highly uncertain.
Stock markets and cryptocurrencies
It appeared that Bitcoin and the S&P 500 Index (2) might go hand in hand, for better or worse, given their increasing link. However, the stock market stayed mostly constant over the last few months while the crypto market declined, and the two markets eventually separated. Their correlation hit a four-month low on November 8 when it dropped to 0.15 before rising again to 0.41.
Beyond equities, though, Bitcoin was regarded as the second-best inflation hedge behind Gold, earning the moniker "digital Gold." The title has been forfeited this year, nevertheless. Compared to last year, Bitcoin's price dropped from $65,509 to $16,493, a 74% decline. In contrast, the decline in Gold was only 4.84%. It would not be shocking if mainstream global investors decided to sell their crypto holdings. Global investors seeking assets to add to their portfolios are beyond the purview of the market's unbridled volatility, which has wiped out renowned companies like Voyager and Three Arrows Capital.
