FTX will be the last giant to fall in this cycle: says hedge fund co-founder ZX Squared Capital

As the FTX Crisis Continues Credit Suisse’s former head of risk believes the collapse of the world’s No. 3 exchange should belast catastrophic event At least in this market cycle.

CK Zheng, Credit Suisse’s former head of valuation risk and now co-founder of crypto hedge fund ZX Squared Capital, said FTX’s failure was part of a “big deal”. A “debt reduction process” that began after the COVID-19 pandemic and accelerated after the debacle of Terra Luna Classic (LUNC), formerly known as Terra (LUNA).

“When LUNA exploded a few months ago I expect a massive debt reduction process to begin,” said Zheng, who predicted that FTX would likely be the last among the “bigger” players to be “cleaned” in the cycle. Before the collapse, FTX was a crypto trading board. Third largest by volume after Binance and Coinbase.

“I’m sure there are many players that could be affected in the future, big or small. But I would say this will be the time when the big players go bankrupt before the whole cycle is really over.”

On Nov. 14, crypto exchange BlockFi admitted to having “significant exposures” to FTX and its affiliates. A day later, the Wall Street Journal reported that it was preparing to file for bankruptcy.

Zheng noted that periods like these are all typical signs of a long and tense crypto winter, which “essentially wipes out a lot of weak players.”

Still, on the positive side, Zheng said the collapse of FTX is unlikely to shake institutional investor confidence. At least for those who invest in blockchain technology and certain cryptocurrencies such as Bitcoin and Ethereum.

Source: LINK

source site