Trading pioneer Peterffy expects steeper 25% drop in bitcoin amid FTX scandal

Thomas Peterffy, chairman and founder of Interactive Brokers Group Inc., patiently awaits a deeper bitcoin pullback as the industry digests the latest scandal to rock the digital asset landscape.

Leading crypto platform FTX filed for bankruptcy last week amid reports that it used client funds to back an affiliated hedge fund founded by then FTX CEO Sam Bankman-Fried.

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“I am surprised that in this scandal he has not gone down [by] as much,” Peterffy told CNET in an interview on Monday, adding that he was watching for another steeper decline in bitcoin BTCUSD,
from its current level of around $16,000 to around $12,000.

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“Maybe it will go down…I was expecting it to hit $12,000 in bitcoins, personally,” he said.

Peterffy’s hope that bitcoin will deepen its current slump by another 25% perhaps belies his otherwise bullish view of the nascent sector that has been dogged by disappointing news and self-inflicted hurt.

IBKR interactive brokers,
The trading pioneer said he has been buying bitcoin for the past four years, but declined to say how much he currently owns. His net worth is around $23 billion, according to Bloomberg’s Billionaires Index.

“There are people who own it long term…and like me, I bought mine about four years ago,” he said. Interactive Brokers introduced crypto trading to its platform about a year ago, but does not take custody of the assets. This is done through Paxos Trust Co.

Regarding traditional markets, Peterffy said he still maintains that the S&P 500 SPX,
is expected to see a 20% decline over the next nine months as investors come to terms with weak corporate earnings, companies weighed down by higher interest rates and inflation.

“I don’t think inflation is going to go down where the Fed wants it to go,” Peterffy told CNET, referring to the central bank’s desire to keep inflation at a level considered healthy for the economy, at 2%.

Peterffy said he expects the S&P 500 “to bottom at 3,000 and 3,300”.

“I definitely wouldn’t buy at current levels, in my opinion,” he said.

He also attributed earth-shattering moves to the Dow Jones Industrial Average DJIA,
the S&P 500 and the Nasdaq Composite Index COMP,
have experienced in recent months a growing lack of liquidity and the use of equity derivatives in the markets.

“Options volumes are overwhelming the stock market,” he said, referring to derivatives, such as put and call options, which can give investors exposure to equities without them having to. own the underlying asset.

“This trend [of options buying] accelerated over the past two months,” he said.

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