{"id":14541,"date":"2022-11-16T03:46:54","date_gmt":"2022-11-16T03:46:54","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/citi-analyst-warns-of-serious-contagion-risk-to-crypto-ecosystem-from-ftx-failure-featured-bitcoin-news\/"},"modified":"2022-11-16T03:46:54","modified_gmt":"2022-11-16T03:46:54","slug":"citi-analyst-warns-of-serious-contagion-risk-to-crypto-ecosystem-from-ftx-failure-featured-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/citi-analyst-warns-of-serious-contagion-risk-to-crypto-ecosystem-from-ftx-failure-featured-bitcoin-news\/","title":{"rendered":"Citi Analyst Warns of ‘Serious’ Contagion Risk to Crypto Ecosystem From FTX Failure \u2013 Featured Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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A Citi analyst has warned of a serious risk of broader contagion to the crypto ecosystem stemming from the collapse of crypto exchange FTX, noting that the contagion \u201ccan last for a significant amount of time.\u201d He added that the crypto industry seems to have \u201cno significant lender of last resort.\u201d<\/strong><\/p>\n

Citi\u2019s Analyst Warns of Broader Contagion to Crypto Ecosystem<\/h2>\n

Citi analyst Joseph Ayoub explained in an interview with CNBC Friday that the overall cryptocurrency market faces risks of contagion from the implosion of FTX. The troubled crypto exchange filed for Chapter 11 bankruptcy<\/a> Friday. The Citi analyst cautioned:<\/p>\n

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I think there\u2019s a serious risk of broader contagion to the ecosystem itself.<\/p>\n<\/blockquote>\n

However, he added: \u201cIt\u2019s unlikely that contagion spreads toward broader financial markets, and that\u2019s mainly because of the size of the crypto space, which is only around $830 billion in comparison to the $43 trillion U.S. equity market.\u201d<\/p>\n

Ayoub further predicted that companies in the crypto sector will face renewed skepticism and trust issues, but noted that it also means other firms can move to capture more market share now that one of the biggest players has gone under.<\/p>\n

\u201cWithin cryptocurrencies, it\u2019s unclear as to how far and how deep this goes,\u201d the analyst said, elaborating:<\/p>\n

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Contagion can last for a significant amount of time, and with the amount of companies that are involved and the amount of investments involved with FTX, and following Chapter 11, it could take a long time for this to resolve.<\/p>\n<\/blockquote>\n

Unlike Binance CEO<\/a> Changpeng Zhao (CZ), the Citi analyst believes that the FTX crash differs from the 2008 financial crisis when the government stepped in with a massive cash injection and bailed out Wall Street. He opined:<\/p>\n

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It almost seems ironic now that we were previously thinking that Sam Bankman-Fried and FTX were providing some sort of lender of last resort optionality \u2026 and now it seems there is no significant lender of last resort.<\/p>\n<\/blockquote>\n

JPMorgan Chase\u2019s analysts similarly said<\/a> last week that fewer players in the crypto space are now able to rescue weaker players. \u201cThe number of entities with stronger balance sheets able to rescue those with low capital and high leverage is shrinking,\u201d they wrote, predicting that the price of bitcoin could drop to $13K.<\/p>\n

Prior to FTX\u2019s bankruptcy filing, Binance was considering acquiring the rival crypto exchange. However, after conducting due diligence, the company decided to walk away from the deal, citing<\/a> \u201creports regarding mishandled customer funds and alleged U.S. agency investigations<\/a>.\u201d<\/p>\n

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Citi<\/a>, citi bitcoin<\/a>, citi crypto<\/a>, citi cryptocurrency<\/a>, Citi Joseph Ayoub<\/a>, Cryptocurrency Exchange<\/a>, ftx<\/a>, Joseph Ayoub<\/a>, Joseph Ayoub analysis<\/a>, Joseph Ayoub bitcoin<\/a>, Joseph Ayoub crypto<\/a>, Joseph Ayoub cryptocurrency<\/a>, Joseph Ayoub FTX<\/a><\/div>\n<\/div>\n

What do you think about the comments by the Citi analyst? Let us know in the comments section below.<\/strong><\/em><\/p>\n

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\nKevin Helms <\/h6>\n

\nA student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

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