December 5, 2022

FTX lost $10 billion: who won

Article reading time:
4 min.

FTX lost $10 billion: who won

FTX was recently in the top 3 crypto exchanges of the world and was valued at more than $30 billion, but after the failure of negotiations with Binance, it went bankrupt and owed about $10 billion to about 100,000 creditors.

As a result, the FTT exchange token fell by 95%, and bitcoin updated the minimum of the year, weakening the hopes of the majority for a trend reversal.

How the collapse of FTX will affect the crypto market and how other cryptocurrencies behave

Well-known crypto resource CoinDesk found out thatAlameda Research had $14.6 billion on its balance sheet, of which $5.8 billion was in FTT (FTX native token), $1.2 billion in Solana (SOL), $3.37 billion in unnamed cryptocurrencies, $2 billion in other assets.

It should be noted that Alameda Research isa trading company created by the founder of FTX, and, importantly in this situation, has used the assets of FTX clients for trading and has specialized in arbitrage strategies since 2018, comments the managing partner of the fintex company
Bitfrost Anton Chashchin.

Alameda Research also had commitments to$8 billion, including $2.2 billion in FTT-secured loans. This was one of the factors why FTT, SOL, Ethereum and Bitcoin fell the most in the cryptocurrency space.

In addition, the fall in the price of bitcoin was affected bya liquidity crunch and forced liquidations of investment giants such as BlackRock, SoftBank, VanEck, Sequoia Capital, and even the Ontario pension fund that were privately investing in FTX. Sequoia Capital, in its report to investors, confirmed the loss of hundreds of millions of dollars on FTX.

In addition to FTX, more than 130 were affectedaffiliated companies, which subsequently also filed for bankruptcy. Clients and retail investors (approximately $5 billion worth) were affected, unable to withdraw money from FTX, as the exchange stopped withdrawing funds after November 10th. The company has accumulated more than $10 billion in debt.

Who won in the situation with the collapse of FTX

Competing decentralized exchanges wonlike Uniswap or Compound, the main message of which is that they are not dependent on the decisions of one person. Suspicious transactions between FTX and Alameda Research on a decentralized exchange would be visible.

The creators of cold wallets were also the winners. For example, Trezor, a major hardware wallet provider, recorded a 300% increase in revenue in just one week, and this trend continues.

According to the data on the positions of participants on the BTC-USD pair from the Bitfinex exchange, it is clear that there were players who held shorts before the big drop, however, their number was the lowest in the last six months.

What to expect next

The FTX bankruptcy was the largest cryptocurrency exchange bankruptcy in history - much larger than it was in its time with the MtGOX crypto exchange.

In addition, Bitcoin has fallen more than 78% from last November’s high, and 23% since the start of the month, from $20,500 to $15,700. The market capitalization of cryptocurrencies suffered losses of almost $2.2 trillion.

From a technical point of view, bitcoin broke througha six-month support level at $17,593, which became a resistance level after the retest. The development of history with FTX could lead to a further fall of bitcoin to support in the range of $11,000 to $13,500.

From a fundamental point of view, the US Federal Reservecontinues to fight inflation, which eventually bears fruit (CPI Core fell from 6.6% to 6.3%) and this gave the market a little momentum for growth. However, when assessing rates for 2023 by the Fed itself, the likelihood of their increase remains, which negatively affects various assets, including cryptocurrency. In addition, futures for the Fed rate also show a high probability of further rate hikes next year, but at a slower pace.

Other statistics are also interesting, which stand out against the backdrop of the FTX bankruptcy, the decline in the price of the cryptocurrency and the loss of faith in the market. At the same time, we observed an increase in the interest of institutional investors.

In terms of cash flow analysis, according toAccording to CoinShares, for the week ended November 11, the inflow of money into digital assets amounted to $42 million, which is the largest inflow of funds in the last 14 weeks. In total, 32% of hedge funds invested in digital assets in the third quarter, compared to 20% in the same period last year, 2021. This gives the impression that interest in cryptocurrencies is growing.

Output: recent events with the FTX exchange have added skepticism to the market, however, despite the prolonged crypto winter, we will be able to see the first changes in market conditions by the spring of 2023.