The cryptocurrency market has been rocked by the FTX exchange crisis, which has resulted in a significant capital outflow from most digital assets. With assets like Bitcoin (BTC) correcting to a new yearly low, analysts are now projecting that the current market conditions might spill over to other sectors.
Indeed, commodity strategist at Bloomberg Intelligence Mike McGlone has stated that the crypto market slump can trigger a capitulation in other markets in what he termed as ‘macroeconomic dominoes’, he said in a tweet on November 9.
“This Bitcoin, Crypto Slump May Trigger Macroeconomic Dominoes – The breakdown of Bitcoin and crypto assets may trigger capitulation sell stops in most markets that have been under pressure this year,” said McGlone.
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In a market analysis, the strategist suggested that although the FTX fallout is a shock to the crypto sector, the macroeconomic effect might be significant.
Bitcoin likely to correct to $10,000
However, McGlone maintained that Bitcoin remains one of the fastest horses in the race, but the asset risks testing $10,000 support. In this line, Bitcoin was trading at $17,400 by press time after correcting by over 11% in the last 24 hours.
Furthermore, the analyst’s projection of a spillover to macroeconomics comes when Bitcoin has traded in tandem with the equities amid soaring inflation and tightening Federal Reserve policies.
Timeline of FTX crisis
Notably, tables began turning on FTX after it emerged that the balance sheet of Alameda Research, a crypto trading firm founded by Sam Bankman-Fried, the owner of FTX, was full of the exchange native FTT tokens. Therefore, it meant that Alameda was built on the foundation set up by a sister company.
The market was shaken after Binance CEO Changpeng Zhao indicated that the company would sell its holdings of FTT tokens. At the same time, Binance announced it would be acquiring FTX, a deal that market opinion leaders suggest will stabilize the crypto space but is challenging to finalize.
The extent of the fallout was recorded after the cryptocurrency market lost over $100 billion in the capital within 24 hours. By press time, the general crypto market capitalization had slumped to around $866 billion.
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