Bitcoin, often likened to a scrappy fighter that never gives up, has suffered recent blows with the collapse of industry giant FTX and the arrest of its founder Sam Bankman-Fried. Despite being accustomed to taking hits, the cryptocurrency was already struggling after a tough year. It now finds itself on the canvas, dazed and confused, but the question remains whether it’s down for the count.

Bitcoin increase

Bitcoin’s rise from a niche, low-value digital currency to a multi-billion-dollar industry behemoth is akin to a Rocky-style underdog story. Launched in 2009 on internet forums, Bitcoin’s value was initially only a few pennies, with only a small group of true believers. However, over the years, Bitcoin’s band of promoters grew, helping to develop and defend the currency against the establishment. Bitcoin’s value eventually surged to thousands of dollars and it began to be accepted on specialist websites and in trendy cafes. Against all odds, Bitcoin became sought after, attracting imitators like Ethereum, Dogecoin, and Litecoin. In 2021, Bitcoin achieved extraordinary fame and fortune, with one coin costing nearly $70,000 and investors from the establishment clamoring to invest in Bitcoin and other crypto projects.

Turning point

Bitcoin’s value and reputation have taken a hit following the collapse of FTX, the world’s second-largest exchange. FTX’s bankruptcy has been the biggest shock to the crypto industry in years and was seen as one of the most trusted platforms until its finances were revealed to be unstable. The founder, Sam Bankman-Fried, is now in custody and accused by the US of building “a house of cards on a foundation of deception”. This event has contributed to Bitcoin’s recent losses and has left the crypto space facing a watershed moment, according to Stefan Deleveaux, president of the Caribbean Blockchain Alliance.

The collapse of FTX has been a significant blow to the crypto industry, with its founder Sam Bankman-Fried now in custody and accused by the US of deception. However, the cryptocurrency sector has been repeatedly hit in 2022, leading some experts to predict a crash. Professor Carol Alexander from the University of Sussex Business School, who foresaw the 2022 crash, admits to being surprised by the frequency of negative events in the sector. The Caribbean Blockchain Alliance’s president, Stefen Deleveaux, believes that the recent FTX scandal is a watershed moment for crypto and that worse days may follow.

Blows

The cryptocurrency market has been hit with multiple scandals, causing significant losses in value and trust. In May 2022, two popular digital coins collapsed, leading to $400bn being wiped from the value of Bitcoin and the crypto ecosystem. The founder of these coins, Do Kwon, is now wanted by South Korean authorities. Other scandals include Kim Kardashian being fined for promoting an ill-fated crypto coin, the collapse of the previously booming NFT market, and massive hacks on crypto companies, including the theft of $600m from the Ronin Network. As a result, large crypto companies such as Celsius, Three Arrows Capital, and BlockFi have gone bankrupt, leaving investors out of pocket. The price of Bitcoin, seen as a barometer for the entire ecosystem, is currently at less than $18,000, a 70% fall from its November 2021 peak.

The crypto industry has been rocked by a series of scandals and setbacks, with the collapse of FTX exchange being the most recent and significant. The fall of FTX and other exchanges has led to withdrawals of billions of dollars from crypto companies, leaving a huge hole in the industry. Experts warn that crypto’s future depends on having a strong and diverse pool of exchanges to survive. Despite the negative news, crypto technology remains a powerful tool for improving lives and building the future of the digital global economy. The adoption of Bitcoin and stablecoins in developing countries without reliable financial infrastructure shows that the technology is making progress.