FTT, the utility token of Sam Bankman-Fried’s now bankrupt and potentially fraudulent cryptocurrency exchange FTX, is up a stunning more than 180% since the start of the year. FTT/USD was last changing hands at close to $2.40 per token, having ended last year close to $0.80.

That’s still a far cry from its early November levels prior to the implosion of FTX in the $26 area. But the recovery so far this year has nonetheless come as a big surprise.

FTT Benefits From Broader Crypto Rally

Broader cryptocurrency market flows have been one factor supporting FTT since the start of the year. At current levels around $21,000, Bitcoin is up about 27% on the year, while Ether is up around 30%. Meanwhile, the Exante Altcoin cryptocurrency index is also up close to 30% and the broader cryptocurrency market capitalization has recovered to above $900 billion from recent lows under $750 billion.

Further evidence that inflation in the US is rapidly fading, while growth also appears to be stuttering has led macro traders to lower their Fed tightening expectations for 2023. This has supported 2023 is going to be an easier year for crypto than 2022, a year characterised by aggressive global monetary tightening that forced many investors to exit speculative investments (the primary cause of the crypto bear market).

Macro headwinds thus go someway to explaining FTT’s rise since the end of 2022. Retail traders betting on the underdog in an effort to force a short-squeeze (as in the meme stock craze of early 2021) might also be supporting the token – LUNC, the token of the failed original Terra blockchain has seen similar short-squeeze-induced rallies in recent months.

Bulls Hope For an FTX Revival

But another key factor behind the recovery appears to be hopes that the FTX exchange might be revived, which could bring some fundamental value and utility back to the FTT token. In a recent interview with the Wall Street Journal, FTX’s new CO John J. Ray III said he is exploring the possibility of reviving the FTX exchange. “If there is a path forward on that, then we will not only explore that, we’ll do it,” he told the WSJ, before adding that “everything is on the table”.

The comments triggered a more than 30% rally in one day on Thursday. According to Ray III, customers have praised FTX’s technology and stakeholders have shown an interest in potentially reviving the platform. However, crypto industry commentators have expressed doubts that the exchange could pull off a successful revival.

Users who have already fled to other exchanges like Binance may feel unsafe to return, with many having been financially stung. Liam Hennessy, a digital assets lawyer and partner at an Australian law firm, said it would be difficult for FTX to attract users again given reputational damage and a lack of trust. Hennessy added that jumping “through the hoops the major jurisdictions will set such as the US, UK and Australia will be a serious challenge”.

Is It Too Risky to Buy FTT?

That’s for the individual investor to decide. But anyone buying FTT will need to have a very strong stomach. Yes, a successful exchange revival, alongside an ongoing crypto bull market could potentially see the coin 3, 4 or even 5x from here. But there is every possibility that the revival never comes off and FTX eventually switches off for good, which would render the tokens worthless.

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