FTX is dead, but don't dance on crypto's grave just yet

This is Bloomberg Opinion Today, a blue-ticked verification of Bloomberg Opinion’s opinions. Sign up here. Crypto is well past its peak. Are [Bloomberg]( Follow Us [Get the newsletter]( This is Bloomberg Opinion Today, a blue-ticked verification of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - Crypto is [well past its peak](. - Are we past [peak inflation](? - Are bond markets [past their peak pain](? - UK consumer pain [still hasn’t peaked](. Have Fun Staying Poor At his peak, crypto mogul Sam Bankman-Fried was worth $26 billion. At the start of this week, he still had $16 billion. Following the collapse of his crypto exchange FTX and his Alameda Research trading house, his assets in Bermuda have been frozen by the authorities, he’s being investigated by the US Securities and Exchange Commission for potential violations of securities rules, and regulators in Cyprus are poised to suspend his license to operate in Europe. By Thursday, the Bloomberg Billionaires Index was valuing FTX’s US business at $1, down from $8 billion in January. That’s not a typo. One dollar. A single greenback. A sole Washington. On Friday, FTX filed for bankruptcy. “Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.” Samuel Beckett’s exhortation to fail better seems an apt summary of Aaron Brown’s view. Markets always find new ways to implode, no matter how much regulation is imposed on them, he says. But [that’s a feature, not a bug](, of financial innovation. The development of digital exchanges offers a plethora of new techniques that financial Darwinism, rather than the heavy hand of new rules, will eventually winnow. “Innovations have the potential to fix problems and eventually eliminate them, while no one can believe that some future round of regulation will be the one to finally solve the ancient problems of finance,” Aaron writes. Allison Schrager ‘fesses up that she’s been “rooting for the crypto market to [crash and burn](.” Me too, Allison, and for much the same reasons: “I don’t understand it, what value it serves or what problem it solves.” While the crypto collapse that’s seen Bitcoin decline by about 75% in the past year has few systemic implications, she worries about the people losing money, many of whom may be newcomers to investing and who may lose faith in the ability of financial markets to provide a store of wealth in the future. “The ultimate lesson here is not that markets are bad or a rigged game,” Allison writes. “It’s that you should never speculate more than you can afford to lose in an asset class that has no clear intrinsic value.” Bonus Virtual Currency Reading: [Crypto can survive]( the demise of FTX: Tyler Cowen The Bond-Market Beatings Can Stop Now That Inflation Morale Has Improved Figures this week showed US inflation slowed in October and was much less scary than economists had anticipated. As well as the headline inflation rate dropping to 7.7% from 8.2% a month earlier, the core measure excluding volatile food and energy prices also waned. “The alarming and almost constant increases that started early last year have ended,” notes John Authers. Traders have reacted logically by scaling back their expectations for how high the Federal Reserve will push official interest rates. But the scale of [the accompanying bond market rally seems overdone]( to John. Three decades of data shows the decline in the five-year Treasury yield was the sixth-biggest on record: “The October CPI number has prompted more buying of Treasuries than did the 9/11 terrorist attacks, or the Greenspan Fed’s surprising inter-meeting rate cut in response to the Long-Term Capital Management meltdown in 1998,” John calculates. After 14 months of debt market carnage, “[the risk-reward teeter-totter]( that investors care so much about has started to look relatively decent at current longer-term Treasury yields,” argues Jonathan Levin. Yields on 10-year bonds typically decline well in advance of actual Fed rate cuts; during the past five rate-increase cycles, rallies have begun on average 206 days before the first policy easing. “The nation’s inflation problem is far from solved, and the Federal Reserve remains committed to keeping short-term interest rates elevated,” Jonathan writes. “But longer-term government bonds may finally be worth a second look.” Telltale Charts The UK consumer sector isn’t showing signs of distress — yet. “The pain has been [deferred, not dispelled](,” argues Andrea Felsted. “Companies serving British consumers should make the most of these specks of glitter amidst a wall of gloom. Any sparkle will be in very short supply next year.” Further Reading Golden eggs and flying unicorns; as Masayoshi Son steps away, [Softbank’s drama days are over](. — Gearoid Reidy “Make in India” will need [more than government subsidies to succeed](. — Mihir Sharma [A G-20 talking shop]( in Bali? That’s no bad thing. — Clara F. Marques Why the Democrats [did better than expected]( in the midterm elections. — Matthew Yglesias Joe Biden mustn’t [squander the lame-duck session]( before the new Congress is sworn in. — Jonathan Bernstein [Sending troops to Haiti](would make a bad situation even worse. — Bloomberg’s editorial board ICYMI [The entire $16 billion fortune]( of crypto exchange FTX co-founder Sam Bankman-Fried has been wiped out in days — one of history’s greatest-ever destructions of wealth. Much of the world’s unwanted plastic is [ending up in Thailand](. Elon Musk warns that [Twitter may go bust]( if it continues to burn through cash. The economic contraction in the UK heralds the start of a [prolonged recession](. The European Union says [recession is already here]( and the inflation shock will linger on. Kickers A 20-year-old Brit called George Scholey set a new world record for completing [the most Rubik’s Cubes in 24 hoursÂ](with an incredible 6,931 rotating puzzles solved. [A piece of the space shuttle Challenger](, which exploded after launch in 1986, has been found by divers searching for World War II aircraft wreckage off the coast of Florida. A former Vatican financial auditor says he has proof of [financial mismanagement by the Catholic Church](and is suing for his dismissal in 2017. Notes:  Please send angry gingerbread men and feedback to Mark Gilbert at magilbert@bloomberg.net. [Sign up here]( and follow us on [Instagram](, [TikTok](, [Twitter]( and [Facebook](. Like getting this newsletter? 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