Cryptocurrency markets have been trending lower alongside traditional markets for most of the year as rising inflation continues to spark investor fear.
Sam Bankman-Fried, founder and CEO of cryptocurrency exchange FTX, offered an explanation for the sharp declines Thursday during a presentation at Piper Sandler's "Global Exchange & Brokerage Conference."
"A lot of VC firms slowed down their investing ... across the spectrum you saw inflows of money slow down, the outflows speed up," Bankman-Fried said.
The Nasdaq is down by more than 20% year-to-date, while the world's oldest cryptocurrency Bitcoin (CRYPTO: BTC) has fallen by nearly 35% since the start of the year.
The accelerated outflows really just exacerbated the decline, he said. The FTX CEO attributed the selloff in crypto, as well as the Nasdaq, to strength in the U.S. dollar and monetary policy changes.
The Federal Reserve has embarked on what is expected to be its most aggressive tightening cycle in more than 40 years as the central bank attempts to tame elevated inflation.
"Which caused basically, you know, a positive reevaluation of the U.S. dollar and so a negative move versus the U.S. dollar for everything else," Bankman-Fried said.
Still, he remains confident in the future of crypto and believes it can have a real impact right now in terms of modernizing current financial technology.
During a CNBC interview following Bankman-Fried's Piper Sandler conference presentation, the FTX CEO highlighted the legitimate case for crypto as it stands today.
"I think there's a ton that blockchain and crypto can help with in terms of modernizing settlement, payments, transfers. Having real stores of value, especially in countries that don't have good ones right now," Bankman-Fried said.
$BTC Price Action: Bitcoin was down 0.25% over a 24-hour period, trading at $30,281.60 Thursday at time of publication.
Photo: Eivind Pedersen from Pixabay.