FTX CEO Sam Bankman-Fried has blamed the Federal Reserve for the crypto crash amid the biggest interest rate hike since 1994.
For a while, central bankers have feared that the proliferation of cryptocurrencies and their integration with mainstream banking would result in a financial collapse.
However, according to Bankman-Fried, the Federal Reserve is responsible for the recent downturn in the cryptocurrency market. “The core driver of this has been the Feds,” he said as the aggressive increase of three-quarters of a percentage point in interest rates has made investors skittish while pushing inflation up.
Bankman-Fried did not mean to be solely critical, arguing that he understood and respected the Fed's motivation. However, a lot of his business decisions and future success were contingent on decisions made by the Feds.
Meanwhile, Bitcoin (BTC) continues on a downward trajectory and the mainstay of the cryptocurrency market has crashed along with it. Today, BTC trades under $20,000 and nobody is certain if recovery is underway just yet.
However, whale investors seem to be safe for now. The biggest worry is how retail investors would handle the sharp downturn and whether they will outlast it by holding on to digital assets or selling in a hurry and cutting their losses.
It seems that most people would like to retain their investment options (at least those living in America), according to a recent survey which indicated that crypto investors aren’t as fearful as previously thought. Nevertheless, there are still issues for retail consumers.
Crypto lenders Celsius Network and Babel Finance suspended their withdrawals asking consumers to invest more money to service existing loans. This angered people causing many to threaten to sue.
Regardless of whether the Feds caused a recession in the cryptocurrency market, the reality that the industry is in a bearish market remains.