FTX, one of the world’s largest crypto asset exchanges, has finally declared bankruptcy. Being a centralized entity, FTX was very well known, especially in the USA, despite its establishment as a Bahamian registered company. He had invested heavily in advertising campaigns.
From the start, many institutional investors also put money into FTX. Famous FTX investors included Blackrock, Tiger Global, Sequoia Capital, SoftBank, Lightspeed Venture Partners, Singapore state investment firm Temasek, and even a retirement fund for teachers in Ontario, Canada. These investors will have to swallow hundreds of millions of dollars in losses.
But more importantly, there were serious concerns about the future. Funds brought by institutional investors are of great importance for crypto assets to make new rises. Institutional investors can both bring much larger funds to the ecosystem than individual investors, and maybe millions of individual investors or pioneers with the environment of trust they create.
It is of great concern that events such as FTX may negatively impact institutional investors’ interest in the crypto-asset sector. Institutions that have lost their investments in FTX will either leave the ecosystem completely or eat the yogurt by blowing it. Those who have not invested so far may either be very afraid or think that the decision not to invest is the right one and continue to stay away from investment. In this case, institutional investors, who are very important actors for new rising seasons and the development of the blockchain economy, can be lost to a large extent.
In order to evaluate the position of institutional investors, which is so important, it is necessary to wait for the FTX event to end with all aftershocks. Can other companies go bankrupt? How do these potential bankruptcies happen? The institutional investor will want to see them first.
Once everything is over and the dust has cleared, cryptoassets will probably be attractive again for institutional investors, but it may not be as difficult as it is feared today. Because many companies that should have gone bankrupt due to the policies implemented by the central banks still continue to operate in the economy. There are also very famous brands among them. For this reason, economies are seriously ill, especially on the production side. Institutional investors are already having a hard time finding companies with really good performance data and high returns.
If central banks succeed in reducing inflation from now on, the zero interest environment will return. In this case, it will be very difficult to find investments that provide high returns for institutional investors in classical markets. If central banks fail to reduce inflation, this time institutional investors will find that they are not getting much real returns other than inflation.
Eventually, when central banks switch back to expansionary monetary policies, the price of a limited asset, Bitcoin, will rise significantly again. Of course, many altcoins will still outperform Bitcoin. In this case, cryptoassets will again emerge as an important option with high returns that are impossible to find in classical markets. Even for institutional investors who were terrified of FTX and aftershocks.
Moreover, the FTX incident may accelerate the coming of regulations in the USA. Licensing centralized crypto-asset institutions like banks, making their balance sheets transparent and auditing frequently will make this area attractive even for many institutional investors who have not entered the sector until now.
Events that seem like a disaster today may open the door to great advantages in the near future…