FTX Payments to Start, LIBRA Token Impacting Crypto Market: What’s the Weight?

The crypto market that experienced a significant surge after Donald Trump’s election in November 2024 is now facing challenges. Bitcoin, which initially soared by 60% following the election, has seen a drop of over 12% from its peak in January 2024.

Currently, Bitcoin is trading at US$95,139 (AU$149,902), but the overall crypto market is being impacted, with Solana experiencing a more substantial decline of over 5% within 24 hours. The Fear & Greed Index has shifted from Extreme Greed to Fear, now standing at 44, indicating a negative sentiment in the market.

The market’s fear is believed to be due to uncertainties surrounding Trump’s tariffs and economic policies, along with reduced expectations for US rate cuts, which have contributed to the negative outlook. Moreover, recent events involving memecoins, like the TRUMP memecoin saga and the LIBRA rug pull scandal, have further dampened sentiment towards cryptocurrencies.

The LIBRA scandal has escalated with allegations involving Argentine President Javier Milei’s administration, who is now facing impeachment threats over his involvement with the token. LIBRA had initially reached a market cap of approximately US$4.5 billion (AU$7.09 billion) before losing a significant portion of its value.

Additionally, developer Hayden Davis, known for his role in the development of LIBRA, TRUMP, and MELANIA, has admitted to engaging in market manipulation through sniping, a practice that takes advantage of a crypto’s volatility to make profits. Reports suggest that Davis may have influenced President Milei’s decision-making process through payments to his sister Karina.

On the other hand, the FTX bankruptcy estate has initiated a creditor repayment program amounting to over US$16 billion (AU$25.2 billion). While some small claim holders have started receiving their reimbursements, most investors are anticipated to face losses due to the repayment being based on prices during the FTX collapse. Given that Bitcoin was trading around US$20k at that time, investors may experience significant setbacks.

In conclusion, the cryptocurrency market is currently grappling with the aftermath of recent events, including the decline in Bitcoin and Solana prices, the escalating LIBRA scandal, and the commencement of FTX’s creditor repayment program. These factors have contributed to a negative sentiment in the market, leading investors to navigate through uncertain waters in the crypto landscape.