An advertisement for Bitcoin cryptocurrency is displayed on a street in Hong Kong, on Feb. 17, 2022. THE CANADIAN PRESS/AP/Kin Cheung
TORONTO – It’s been a wild week in the crypto market following the collapse of exchange platform FTX, but an industry insider says that while the situation is probably one of the most unfortunate events in the history of the asset class, it’s not the end for the sector.
Crypto prices sank dramatically after rival exchange platform Binance pulled out of a deal to purchase FTX earlier this week, citing significant concerns.
And on Friday, FTX filed for bankruptcy and CEO Sam Bankman-Fried stepped down.
Brian Mosoff, chief executive at Ether Capital, a Toronto-based firm that provides investors access to the cryptocurrency ethereum, says even though retail investors are on edge due to uncertainty around the worth of crypto assets, those that understand the technology that underpins cryptocurrencies – blockchain – likely recognize that the sector still has potential.
This year hasn’t been particularly great for the crypto market in general, with the price of Bitcoin tumbling significantly after reaching an all-time high of over US$68,000 in November of last year.
Bitcoin was trading at US$16,820 on Friday afternoon. The cybercurrency is down more than 19 per cent over the past five days.
Mosoff says this year will wash out “a lot of the scam and hype assets” that came about in 2020 and 2021.
He says investors will likely become more conservative in their exposure to the space, choosing to hold just a little bit of bitcoin and a little bit of ether, the two most common crypto assets.
Mosoff adds that the events of this year will force other crypto trading platforms to be more transparent.
It’s not just your individual investors who have put money into crypto; major funds have also been taking a chance on the space.
In a statement released Thursday, the Ontario Teachers’ Pension Plan said it invested US$95 million into both FTX International and the U.S. entity.
Teachers’ said any financial loss on its investment in FTX will have limited impact on the pension plan because the investment represents less than 0.05 per cent of its total net assets.
This report by The Canadian Press was first published Nov.11, 2022.
