Here’s why cryptocurrency prices could plummet further in the FTX-crash induced bloodbath

Bitcoin price is likely to plummet lower as institutional investors pull capital out of crypto. Experts believe it is likely that institutions and large-wallet investors are less likely to enter crypto markets in light of the FTX-crash and reduced volatility in cryptocurrencies. 

Also read: Tom Brady, Stephen Curry and Golden State Warriors slammed by lawsuit over FTX endorsements

Large-wallet investors stay wary of contagion risks post FTX-induced crash

As the recent spike in Bitcoin price volatility subsides, experts believe institutions are less likely to re-enter crypto markets with significant force yet. Institutional investors have been wary of the recent volatility in the crypto market. 

Samuel Bankman-Fried’s FTX exchange crash and the subsequent bankruptcy filing triggered a bloodbath in cryptocurrencies. Bitcoin price declined 13% within ten days. BTC price hit a bottom of $15,900 before recovering to the $16,500 level. 

The magnitude of Bitcoin and Ethereum price movements has been declining since January 2022. Since a lack of price movement gives investors less opportunity to generate gains, declining volatility pushes large volume traders out of the crypto market. 

Prior to the FTX crash, Bitcoin price ranged between $19,000 and $20,000. Post the FTX bankruptcy, BTC is exchanging hands around the $16,500 level. Ben McMillan, CIO of crypto index provider IDX Digital Assets, was quoted as saying:

Right now, most of the institutional investors we talk to are content to sit on the sidelines and just wait...they haven't sworn off the space, but they're not doing anything in crypto right now especially against this macro backdrop.

McMillan believes crypto investors are currently anxious about future developments that could send crypto markets spiraling further. Traders are waiting for Bitcoin price to find its bottom. Experts believe that the price is closer to the bottom of the cycle for Bitcoin and other cryptocurrencies.

RektCapital, a crypto analyst and trader, noted that it has been 365 days since the Bitcoin bull market peak at $65,000. The analyst believes that the bear market is close to ending and historically, BTC bear markets tend to find their absolute bottom price approximately a year after hitting an all-time high.