According to Bankman-Fried, the Fed’s aggressive interest rate hikes to combat excessive inflation have resulted in a “recalibration” of risk expectations. Sam Bankman-Fried, CEO of FTX, an app and website that allows investors to purchase and trade digital currencies, said “the core driver of this has been the Fed.”
The Fed raised interest rates for the first time since 1994 earlier this week. Financial markets have been increasingly anxious, and cryptos have been in meltdown mode, as the era of cheap money is quickly passing us by.
Bankman-Fried stated, “Literally, markets are scared, people with money are scared.” Bitcoin, the most well-known cryptocurrency, fell by roughly 20% last week and continued to fall over the weekend. Its value has plummeted to less than half of what it was at the start of the year.
Other digital currencies have plummeted even more dramatically – Ether has lost more than 70% of its value in the same time frame. Some people have even put their money into cryptocurrency lenders.
A couple of lenders have stopped their customers from getting their money back in the last week, and the resulting disarray is stoking worries of a financial system-wide meltdown. All of the attention attracted a large number of newcomers.
According to a December study, a quarter of investors possess Bitcoin, and more than half, or 55 percent, begun investing in the past year.
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