A horror year for cryptocurrencies reached its latest zenith as crypto exchange FTX filed for bankruptcy. This has raised fears over contagion in this nascent asset class and seen investor nervousness grow over other participants in the market.

In what resembled a digital version of a bank run, concern about the financial position of FTX and other firms owned by its founder and, now former, chief executive Sam Bankman-Fried led many customers to try and withdraw funds from the exchange.

This created a big cash squeeze and, after attempts to secure a bailout failed, many were unable to access their money. Filing for Chapter 11 bankruptcy will at least give FTX the chance to restructure its debts as it continues to operate for the time being.

The CEO of Crypto.com Kris Marszalek dismissed speculation that his platform could be next to suffer, offering reassurance via an interview on YouTube that the exchange has a ‘very strong balance sheet’. Recent events will only add to clamour for greater regulation of this market.

In the wake of the demise of FTX the price of bitcoin fell to levels last seen in October 2020 at less than $16,000. To put this into perspective it traded at an all-time high above $69,000 almost exactly a year ago, with the continued volatility belying claims that it could represent a durable alternative to gold as a store of value.

Analytics software firm Microstrategy (MSTR:NASDAQ) has a big investment in bitcoin which has seen it get caught up in the current turbulence. In October it held 130,000 bitcoins acquired at an average purchase price of $30,639.

UK-listed bitcoin miner Argo Blockchain (ARB:AIM) extended its share price losses to trade down more than 90% so far in 2022. Bitcoin works on ‘blockchain’ technology, and a block is a piece of computer code that stores the data for a transaction. It is linked to the existing chain of blocks which acts as a record of all transactions.

Mining bitcoin means verifying transactions and adding new blocks to a blockchain ledger, a complex process which is rewarded with bitcoin.

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