Bitcoin bounces to 2-year low even as traders remain cautious following FTX collapse

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The crypto market has been battered this year, with more than $2 trillion wiped off its value since its peak in November 2021. Cryptocurrencies are under pressure following the collapse of major exchange FTX.

Jonathan Raa | Nurphoto | Getty Images

Bitcoin jumped higher on Wednesday, bouncing off the previous day’s two-year low, even as traders remain cautious about potential contagion from the collapse of cryptocurrency exchange FTX.

The world’s largest digital currency rose nearly 1.6% to trade at $16,397.28.

“We are bouncing at a support level, which is quite to be expected given that we have been quite oversold for the past two weeks,” Vijay Ayyar, vice president of business development and international at crypto exchange Luno, told CNBC.

“However, this move does not indicate bullishness yet… We could see a bearish bounce here, looking at resistance around $17K, before moving further down towards $14K,” he added.

Markets remain tense after the fall of FTX, once a $32 billion empire that was one of the world’s largest cryptocurrency exchanges.

Fearing there could be contagion from the FTX fallout, investors are looking for signs of other companies or entities that may have been exposed to the exchange, which was founded by Sam Bankman-Fried.

“In general, markets were nervous after FTX, anticipating further contagion from FTX-related lots,” Ayyar said.

FTX could have over 1 million creditors. The company owes $3.1 billion to its 50 largest unsecured creditors alone. However, FTX’s various entities around the world only had about $1.24 billion in cash balances as of Nov. 20, according to a lawsuit published this week.

Bankman-Fried, who stepped down as CEO of FTX earlier this month, has been trying to broker a deal to save the stock from his home in the Bahamas, a move that seems highly unlikely.

Meanwhile, Justin Sun, a high-profile crypto entrepreneur, said on Tuesday that he and his associates were considering buying some of FTX’s assets.

Cryptocurrency ether also bounced on Wednesday, trading 2.7% higher at $1,159.02.

Ether was especially under pressure after hackers stole about $477 million worth of cryptocurrency from FTX.

The hackers then converted a huge amount of money — about $280 million — into ether before dumping the assets into another cryptocurrency as they began laundering the money. That selling put pressure on ether.

It’s been a rough year for crypto, with the industry plagued by collapses, liquidity problems, and bankruptcies. Over $1.3 trillion in value has been wiped off the entire cryptocurrency market this year.

What you need to know before investing in crypto



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