Bitcoin's recent crash below $30,000 was 'way more orderly' than past crypto meltdowns, says Sam Bankman-Fried
Lam Yik/Bloomberg via Getty Images
- Bitcoin's sub-$30,000 plunge in July was "way more orderly" than past crypto price tumbles, FTX CEO Sam Bankman-Fried told Bloomberg's "Odd Lots" podcast.
- The 29-year-old billionaire told Bloomberg that many in crypto fret about leverage in the system.
- FTX recently slashed the maximum leverage it offers from 100x to 20x.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
The way Bitcoin's sub-$30,000 plunge in July unfolded was "way more orderly" than past crypto price tumbles, FTX CEO Sam Bankman-Fried told Bloomberg's "Odd Lots" podcast.
"There were $20 billion of long positions that probably got liquidated over a weeklong period," he said. "But the industry was able to absorb that. … The infrastructure and the liquidity in this space held up much better under the liquidations than they did a year ago."
Some crypto exchanges have come under fire for service outages during big price crashes. In May, Binance experienced an hourlong freeze that locked out some users, forcing them to watch helplessly as their leveraged bets were forced into liquidation. Such episodes, while they still occur, were once strikingly common, even for big exchanges like Coinbase and Binance.
The 29-year-old crypto billionaire told Bloomberg that many in crypto fret about leverage in the system when prices collapse and levered positions are forced into liquidation. But fewer people are also willing to acknowledge the role leverage has in crypto's boom times when prices climb.
"I think often people want to live in a fantasy land where leverage can make markets go up but not down. That's not really how it works. For better or for worse, I strongly believe that the crypto ecosystem is in a stronger, healthier position today because of leverage," compared to a world with no leverage, he said.
Bankman-Fried, whose exchange recently slashed the maximum leverage it offers from 100x to 20x, explained the move as trimming some of crypto's excesses, noting that few FTX users were using 50x or 100x leverage anyway.
"It wasn't super relevant to us or most of our users or their experience. It's also not super economically useful, frankly. [Taking on 100x or 50x leverage,] you can't really use that to hedge something, because you could get liquidated in a print, in like 15 seconds," he said.