Sam Bankman-Fried, the popular CEO of cryptocurrency exchange FTX and the well-known crypto billionaire behind Alameda Research, has revealed he believes that the cryptocurrency market bottom may have already been reached.
In a video interview with the CEO and co-founder of Real Vision founder Raoul Pal that first aired earlier this month, Sam Bankman-Fried noted that he doesn’t know “that we’re waiting for the other shoe to drop right now” as he believes “the shoes have dropped and we’re in a, ‘well, let’s see what happens with the world’ type situation.”
Sam Bankman-Fried noted he doesn’t feel completely confident in that statement, which he pointed out is “obviously not financial advice.” The CEO agreed with Pal that the cryptocurrency market plunge isn’t unique to the sector.
As Business Insider reports, interest rate hikes from central banks throughout the world sent markets spiraling downward, with BTC dropping around 44% after the Federal Reserve imposed the second rate hike of the cycle on May 4. Notably, the Terra ecosystem collapsed shortly after, with its native LUNA and UST tokens becoming nearly worthless shortly after.
During the interview, FTX’s CEO said:
I think the way I would phrase it is, I don’t see any particular reasons that we couldn’t be at the bottom and I’m not trying to say that we definitely are at the bottom, but like I think the unwinding that had to happen has happened.
The 30-year-old billionaire has moved to try and halt some cryptocurrency lending platforms from going into bankruptcy, offering crypto lender BlockFi a $400 million lone of credit and Voyager Digital a $500 million lifeline.
The CEO told Raoul Pal that he is deploying capital in projects that would have been fine if it weren’t for the short-term liquidity crunch caused by Terra’s collapse. Per his words, he was saving firms where capital would stop their system from unwinding, avoiding throwing money into a pit.
Per Sam Bankman-Fried, Luna’s collapse wasn’t a surprise, and issues affecting centralized finance platforms revolve around the lack of transparency, as by the time people realized Celsius was in trouble, it was too late and withdrawals were shortly halted.
Such lack of transparency, he said, allows organizations to either use the same collateral in various different loans, or to give out more assets than they have in a process known as rehypothecation. Leverage can, as a result, be far superior to what would be expected.
Addressing the future of the cryptocurrency market, the CEO pointed to payments as a potential catalyst for growing adoption:
I think payments, actually getting them down really well, both domestically and internationally, I think it’s a huge opportunity area.
Bankman-Fried added that a number of factors will play into the growing adoption of the cryptocurrency space, including having user-friendly interfaces, regulatory clarity that will open the doors for institutional capital, and real use cases being addressed.
Featured image via Unsplash