[Asia Economy Reporter Jeong Hyunjin] As the fallout from the collapse of FTX, one of the world's top three cryptocurrency exchanges, continues, Genesis Trading, a major player in cryptocurrency lending, mentioned the possibility of bankruptcy and issued a warning on the 21st (local time). Amid growing anxiety throughout the cryptocurrency industry, the stock price of Coinbase, the largest cryptocurrency exchange in the U.S., hit an all-time low, and the price of Bitcoin also plummeted.
On the 21st (local time), Bloomberg News, citing multiple sources, reported that Genesis is struggling to secure funds and has warned investors that it could go bankrupt if these efforts fail. Following FTX's bankruptcy filing, Genesis conducted funding efforts to secure at least $1 billion in new capital over several days. Binance, the world's largest exchange, also pledged to participate, but Bloomberg reported that Genesis ultimately failed to secure the funds.
Earlier, on the 16th, Genesis suspended new loans and redemptions. This measure was taken in response to a liquidity crisis triggered by an abnormal withdrawal situation, or a "bank run," following the FTX incident, raising concerns about the company's soundness at the time. In addition to Genesis, reports emerged on the 15th that BlockFi, another cryptocurrency lending firm, was preparing to file for bankruptcy protection.
As concerns about the spread of the FTX shock grew, Coinbase's stock price also wavered. Coinbase shares closed down 8.9% at $41.23 that day. During the trading session, the stock price plunged more than 10%, marking its lowest level since its April listing last year. Bloomberg explained, "The all-time low came amid growing investor worries about how far the damage from FTX's bankruptcy will spread."
Coinbase's stock price has fallen more than 80% since the beginning of this year. The market capitalization of Coinbase, which once exceeded $85 billion, has dropped below $10 billion just 19 months after its listing. Earlier, Bank of America (BoA) downgraded Coinbase's investment rating from "buy" to "neutral," citing concerns over the spread of the FTX crisis.
Cryptocurrency prices have also failed to escape the downward trend. According to cryptocurrency information site CoinMarketCap, Bitcoin's price fell to the $15,000 range within a day. Bloomberg reported this as the lowest level since November 2020. Bitcoin's price dropped to the $15,000 range earlier this month when the FTX crisis began, rebounded to the $17,000 range, and has since fluctuated but is now showing a downward trend. Ethereum also fell nearly 3% within 24 hours.
As the cryptocurrency market shakes, investors are pulling out one after another. Mizuho Securities recently analyzed that daily cryptocurrency trading volume is 30-40% lower than this year's average. The Wall Street Journal (WSJ) reported that FTX cryptocurrency investors were optimistic about the situation just a week ago but are gradually losing hope and are worried they will not be able to recover their funds.
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