Have the bitcoin bulls been vindicated?
Disgraced cryptocurrency mogul Sam Bankman-Fried has been sentenced to 25 years in prison by a court in New York. His FTX exchange collapsed in November 2022 with an $8bn hole in its balance sheet, the result of customer funds that had been stolen to bet on high-risk cryptocurrency speculation.
The sentence caps “an extraordinary saga that... exposed the rampant volatility and risk-taking across the loosely regulated world of cryptocurrencies”, say David Yaffe-Bellany and J. Edward Moreno in The New York Times.
A recovery in crypto markets since FTX’s collapse has raised the value of some of the investments left on FTX’s books. Bankman-Fried’s defence pleaded against a stiff sentence on the basis that there may now be enough money left to fully reimburse his victims in US dollar terms – though they would miss out on recent crypto price gains.
Bitcoin has more than tripled in value since FTX’s implosion, and is up 50% so far this year. At roughly $66,000 it remains a little short of last month’s record high above $73,000. In January, US regulators approved the first spot bitcoin exchange-traded funds (ETFs), making it easier for US retail investors to buy into crypto – no equivalent ETFs have yet been approved in the UK.
“Once dismissed as fanatics, the bitcoin bulls” have been at least partly vindicated by the recovery, says Ruchir Sharma in the Financial Times. A few years ago cryptocurrency was lumped together with other modish investments such as “meme stock” GameStop. Yet while these have floundered, bitcoin has bounced back.
“It is extremely unusual for a bubble to burst and then recover to reach new heights so quickly”. With “big institutions” coming on board, bitcoin now looks “more like an asset with staying power than a passing fad”.