The Bitcoin price has dumped 23% since the FTX collapse. Now what?

FTX was partly backed by its own utility token rather than fiat currency.

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Key points

  • The Bitcoin price is down 23% since FTX liquidity issues arose
  • JPMorgan believes the token could fall to US$13,000
  • Institutional investor support appears to be waning following another major crypto collapse

The Bitcoin (CRYPTO: BTC) price has taken a nosedive since the collapse of Sam Bankman-Fried's FTX.com crypto exchange and its related trading company Alemada Research.

This came after news emerged that FTX was partly backed by its own utility token, FTX Token (CRYPTO: FTT), rather than good old-fashioned fiat currency. The resulting big slide in the value of FTT quickly led to a major liquidity crunch for FTX and sent crypto markets into a tailspin.

On 6 November, BTC was trading for US$21,162. At the time of writing, the Bitcoin price stands at US$16,382. That's down 23% since FTX got into trouble and down 66% in 2022.

With that in mind, what might crypto investors expect next?

What could be next for the Bitcoin price?

The FTX meltdown could throw up some continuing headwinds for Bitcoin.

That's according to analysts at JPMorgan, who forecast the Bitcoin price could slide all the way to US$13,000 on the back of these new uncertainties.

According to the analysts (courtesy of Forbes):

What makes this new phase of crypto deleveraging induced by the apparent collapse of Alameda Research and FTX more problematic is that the number of entities with stronger balance sheets able to rescue those with low capital and high leverage is shrinking within the crypto ecosystem…

Given the size and interlinkages of both FTX and Alameda Research with other entities of the crypto ecosystem, including DeFi platforms, it looks likely that a new cascade of margin calls, deleveraging and crypto company/platform failures is starting similar to what we saw last May/June following the collapse of terra.

Hani Redha, a multi-asset portfolio manager at Pinebridge Investments, also doesn't believe the Bitcoin price will get any reprieve from institutional investors this time around.

"What's become clear is it will not find a home in institutional asset allocation," Redha said (quoted by Bloomberg).

"There was a period when it was being considered as a potential asset class that every investor should have in their strategic asset allocation and that's off the table entirely."

However, not all the experts are as bearish on the outlook for the Bitcoin price.

Akeel Qureshi, core contributor to Hubble protocol and Kamino Finance on the Solana blockchain, believes a recovery is on the horizon.

Qureshi said (quoted by Forbes), "The market is taking a hit, but crypto's volatility has historically led to shakeouts that ultimately strengthen the space in the long run."

Remember, whatever your own outlook may be for the Bitcoin price, never invest more than you can afford to lose.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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