Several analysts warn that this might be the time to get out of crypto, even as the collapse of FTX sends shockwaves through the crypto markets.
Television host and author Jim Cramer commented on the recent crash in crypto prices after discussing the news that the FTX exchange was insolvent. Cramer also urged those watching to take advantage of the slight rebound in prices to get out of the market.
Analysts warn of extended crypto bear market
“We have individuals who are in these things right now. And you’re getting a huge move up because of the CPI. That’s your chance…Please sell something or get off margin,“ Cramer pleaded.
Cramer’s statements come in the wake of a shocking week that saw one of the most trusted cryptocurrency exchanges, FTX, enter bankruptcy. Its filing sent markets reeling, causing major cryptos to have their CPI-related gains wiped out.
Bitcoin fell to roughly $16,750 after rallying to $17,500 when the CPI results were released on Nov. 10, 2022. It is down over 70% since reaching an all-time high of roughly $69,000 on Nov. 10, 2021.
The crypto market cap is down over two-thirds since it reached an all-time high of $3 trillion on Nov. 8, 2021.
BitMEX co-founder Arthur Hayes said that the crypto market will continue to plummet and that the FTX collapse spells the end of crypto. Additionally, investors should be prepared for significant losses, he added. On-chain analytics provider CryptoQuant also warned that Bitcoin miners are starting to sell off their crypto assets, and if they all do it simultaneously, this could cause a price drop.
One crypto influencer and entrepreneur, Varun Mayya, even said that he liquidated all the crypto he bought in 2013. “I’m out,” he tweeted.
Analysts advise using crypto as it was intended
A Glassnode on-chain analyst echoed Cramer’s sentiments. He expressed disbelief at people who have held onto their Bitcoin for the last six months, despite the bear market:
Entrepreneur Kim Dotcom encouraged people to use the FTX failure as a lesson to use crypto for payments rather than speculation. He also suggested that the pseudonymous Bitcoin founder Satoshi Nakamoto intended that people use crypto for this reason.
Similarly, crypto analyst Boxmining advised people to withdraw their assets from Huobi, KuCoin, and Crypto.com and advocated using self-custodial wallets and private keys instead.
A wallet is the primary access point into the crypto ecosystem. It contains a specialized string of letters and numbers called keys that control access to crypto balances. Centralized exchanges manage the keys to their own wallets and simply allow their customers to buy and sell crypto through them.
While this simplifies user interaction, if an exchange decides to freeze customer funds, they lock the customer out of his crypto since he cannot access the keys. The alternative is to use a self-custodial wallet. In this scenario, a user has complete control over his keys, meaning he has full control over his crypto balances.
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