September 29, 2022


FTX CEO Sam Bankman-Fried (SBF) believes the worst of the crypto winter is over as long as no macro shocks follow.

If the Nasdaq falls 25%, interest rates continue to rise and a two-and-a-half-year recession occurs, then a $10,000 to $15,000 bitcoin price is a reality, SBF warned. If that happens, SBF says, further disaster could follow.

SBF’s FTX has weathered the better part of a somewhat chilly winter that left some companies out in the cold and exposed. Voyager Digital, Celsius, Babel Finance and Three Arrows Capital have experienced a shock freeze that has left some investors desperate to recover their deposited funds.

The market crash is not over, says SBF

Bankman-Fried believes that a small part of the cryptocurrency market crash has yet to happen and that it will be manageable. The disaster began after the collapse of the algorithmically backed TerraUSD stablecoin, a type of cryptocurrency that is pegged to a fiat currency using reserve or algorithmic means.

The founder of Frax, a part-collateral-backed, part-algorithmic stablecoin, believes the collapse of another stablecoin is unlikely in the current crypto winter. With outside assets as collateral, this is “literally impossible,” Sam Kazemian told Be.[In]Crypto in an exclusive interview.

The SBF said the winter was necessary to weed out those investing in crypto without deliberate consideration of an asset’s true value. He says this kind of “down-to-earth” thinking only works during times of market euphoria.

SBF funneled money to troubled cryptocurrency companies in an effort to protect clients’ assets and prevent the spread of adverse effects of interconnected lending. In addition, he said, FTX looked at closing deals that weren’t disruptive but weren’t optimal either. This spending spree by FTX has drawn comparisons to the roles played by banks such as JPMorgan Chase, which acted as a lender of last resort for banks during the 2008 financial crisis.

One of the deals FTX and SBF found favorable was BlockFi, to which it extended a $400 million credit line as the lender struggled to meet liquidity requirements. He has the option to buy the company for $240 million.

In May, SBF bought a 7.6% stake in Robinhood Markets as the stockbroker’s share price took a hit in the spring. Additionally, he loaned crypto lender Voyager Digital $200 million and 15,000 bitcoins. The company used $75 million and then filed for bankruptcy in May 2022.

He smalloneID card that the lack of trust between partner companies makes any transaction between them costly, which he wishes he had known more about before venturing out on his own.

Bitcoin going to $100,000 is pushing it

Speaking of Ethereum, SBF refrained from making price predictions related to the upcoming merger. Vitalik Buterin said he doesn’t expect any proof-of-work fork to disrupt the merger that would see Ethereum’s consensus level change to proof-of-stake. He added that he hopes people don’t lose money.

When it comes to bitcoin, SBF’s sentiments are cautiously optimistic. He believes that the environment of greater regulatory transparency accompanied by a price recovery will help bitcoin rise to greater heights. However, $100,000 may be a bridge too far.

At the time of publication, bitcoin was $23,172.

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