The Aftermath of FTX Collapse: Bitcoin’s Remarkable Recovery
In 2022, the digital currency world encountered a seismic event with the downfall of the FTX cryptocurrency exchange. This collapse left a lasting imprint on the cryptocurrency market, notably affecting key digital assets like Bitcoin (BTC).
Among those held accountable for this financial debacle was Sam Bankman-Fried, the founder and former CEO of FTX. Bankman-Fried was charged with fraud and other infractions that significantly contributed to the exchange’s collapse.
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His sentencing on March 28, 2024, coincided with a pivotal moment for Bitcoin as the cryptocurrency reached unprecedented heights. This surge was fueled by market optimism surrounding potential institutional investments via spot exchange-traded funds (ETFs).
Bitcoin Investment Growth: A Snapshot
Following the events surrounding FTX and Bankman-Fried’s sentencing, Bitcoin’s value experienced a remarkable climb, eventually surpassing the $100,000 milestone. For those who invested $1,000 in Bitcoin during this period, the returns have been significant.
On the day of Bankman-Fried’s sentencing, Bitcoin was valued at $70,744. Fast forward to January 28, 2025, and the cryptocurrency had ascended to $102,850, marking a 45.3% increase.
An initial investment of $1,000 would have grown to approximately $1,451.26, representing a notable gain of about $450 over just ten months. This growth trajectory occurred despite initial setbacks from the FTX debacle, which had cast a shadow over investor confidence, ushering the cryptocurrency market into a bearish phase.
The catalyst for Bitcoin’s resurgence can be traced to several factors, including the approval of a spot ETF, which marked a pivotal turning point for the digital asset market.
Additionally, the election of Donald Trump played a role in Bitcoin’s recent rally. His administration hinted at implementing crypto-friendly policies, and during his campaign, Trump expressed support for integrating Bitcoin into the strategic reserve.
Meanwhile, the U.S. is poised to welcome a crypto-friendly regulatory environment under the Securities and Exchange Commission (SEC) following Gary Gensler’s departure.
Bitcoin’s ability to maintain its position above $100,000, even after briefly slipping below this level, highlights its strength as a short-term resistance mark. This could potentially serve as a springboard for further gains.
Future Prospects for Bitcoin’s Price
As the leading digital currency shows signs of short-term recovery, attention turns to the upcoming U.S. Federal Open Market Committee (FOMC) meeting in 2025. This meeting is expected to provide insights into interest rate decisions and their market implications.
Technical analysis by cryptocurrency expert Captain Faibik, shared in a social media post on January 28, suggests Bitcoin might be gearing up for a rally toward the $120,000 mark.
The analysis is based on Bitcoin’s daily chart, which reveals a rising wedge pattern with higher highs and higher lows between converging trendlines. This formation typically indicates continued upward momentum, suggesting Bitcoin could ascend further before encountering significant resistance.
Should Bitcoin break through the upper resistance of the wedge, it could trigger an accelerated rally, potentially pushing the price toward an all-time high of $120,000. Conversely, failing to sustain momentum might result in a temporary retreat to the $95,000 zone.
