FTX will be the last giant to fall this cycle: Hedge fund co-founder
While the FTX crisis is continuing to unfold, the former head of risk at Credit Suisse believes the exchange's fall from grace should be the last catastrophic event — at least in this market cycle.
CK Zheng, the former head of valuation risk at Credit Suisse and now co-founder of crypto hedge fund ZX Squared Capital said that FTX’s fall was part of a “deleveraging process” that began after the COVID-19 pandemic and further accelerated after the fall of Terra Luna Classic (LUNC), formerly Terra (LUNA).
“When LUNA blew up a few months ago, I expected a huge amount of deleveraging process to kick in,” said Zheng, who then speculated that FTX should be last of the “bigger” players to get “cleaned up” during this cycle.
Before its collapse, FTX was the third largest crypto exchange by volume after Binance and Coinbase.
On Nov. 14, crypto exchange BlockFi admitted to having “significant exposure” to FTX and its affiliated companies. A day later, a Wall Street Journal report suggested it was preparing for a potential bankruptcy filing.
A number of exchanges have also halted withdrawals and deposits this week, citing exposure to FTX, including crypto lending platform SALT and Japanese crypto exchange Liquid.
On Nov. 16, institutional crypto lender Genesis Global said it would temporarily suspend withdrawals citing 'unprecedented market turmoil.'
The fate of these businesses are yet to be determined.
Zheng noted that moments like this are all normal signs of a lengthy, stressful crypto winter which “basically wipes out many of the weak players.”
On a positive note, however, Zheng said that the FTX collapse is unlikely to shake institutional investor confidence, at least for those investing in blockchain technology and certain
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