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

Thomas Peterffy, chairman and founder of Interactive Brokers Group Inc., is patiently waiting for a deeper bitcoin pullback as the industry digests the latest scandal to shake up the digital asset landscape.

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

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“I am surprised that he has not gone down in this scandal [by] so much,” Peterffy told CNET in an interview Monday, adding that he was looking for another steeper drop in bitcoin BTCUSD,
from the current level of about $16,000 to about $12,000.

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

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

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 about $23 billion, according to Bloomberg’s Billionaires Index.

“There are people who own it for the 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 hold the assets. This is done through Paxos Trust Co.

As for 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 will come down to 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, 2%.

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

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

He also attributed the earth-shaking move to the Dow Jones Industrial Average DJIA,
S&P 500 and Nasdaq Composite Index COMP,
has in recent months experienced an increasing lack of liquidity and the use of equity derivatives in the markets.

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

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

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