The market has done a fantastic job of fighting the high-speed implosion of FTX and its former CEO, once the poster boy of the crypto sphere.
FTX’s downfall last week has stirred quite a turmoil in the market, resulting in abnormal withdrawal requests all across the crypto sphere, which further aggravated the situation.
A mid-week crypto upswing was challenged by news of the lending arm of crypto investment bank Genesis Global Trading announcing the temporary suspension of redemptions and new loans. The company argued that it was forced to take this action due to the FTX fallout that sparked a surge in withdrawal requests that topped Genesis’ available funds.
Genesis’ announcement is only the latest in a string of casualties resulting from the liquidity crisis at FTX and its subsequent filing for Chapter 11 bankruptcy protection. The crypto sphere has already taken the brunt of multiple debacles this year including the collapse of the terra USD (UST) stablecoin.
No surprise then that the leading cryptos have been on a steady decline all through the year, momentary upwards blips notwithstanding. And for a while, it seemed this week wouldn’t be any different.
After dipping under $16,000 during the week, Bitcoin finds itself in the middle of a rally, currently at $16,515–its 5% gain from last week setting the tone for the broader market. Following Bitcoin’s lead, Ether currently at $1,193 has gained 9% from last week.
One of the reasons for the jump could be El Salvador’s announcement that it’ll start buying one Bitcoin every day. The move known as cost averaging in trading circles, has been endorsed by others as well, most notably by Justin Sun, the founder of Tron, who tweeted that he too will follow El Salvador’s lead and buy one Bitcoin every day.
Although there’s no denying that a majority of the cryptos bled red because of the FTX saga, many experts believe the broader markets have absorbed the event and are well-prepared to bore the brunt of its domino impact on the industry.
In their analysis, Chainalysis notes that while the number of firms that could face insolvency because of FTX may increase, many of the market fundamentals remain stable.
Read more: The FTX fiasco could reshape crypto forever
For starters, they argue that the increase in crypto-for-USD trades observed last week has died down, with users now appearing to cash out of crypto at roughly the same rates they were before the FTX crisis.
Furthermore, Chainalysis has observed that while users are withdrawing more than they’re depositing, a lot of the funds are just moving to other exchanges, with some of it flowing to decentralized exchanges as well.
The bounce back we’ve witnessed this week is a positive sign. The markets would continue to be under pressure as the fallout of the FTX permeates through the crypto sphere, but the fact that the leading cryptos are ending this week in the green is a positive sign.
Top 3 winners
Name 7-day gain
- TWT 103.9%
- GMX 47.6%
- CHZ 46.5%
Top 3 losers
Name 7-day loss
- HT -21.4%
- WBT -21.2%
- TKX -21.2%
* Data from CoinGecko
