Home CryptocurrencyAltcoin Crypto survived worse than the fall of FTX: Chainalysis

Crypto survived worse than the fall of FTX: Chainalysis

by SuperiorInvest

Blockchain analytics firm Chainalysis compared the fall of Mt.Gox to FTX to determine how FTX’s bankruptcy would affect the ecosystem.

It concluded that FTX was a relatively smaller part of the crypto industry than Mt. Gox and that the industry should bounce back stronger than ever.

On Twitter dated November 23 fiberChainalysis head of research Eric Jardine began his comparison by first looking at the market share of the two firms and found that Mt. Gox averaged 46% of all exchange flows in the year leading up to its 2014 collapse, compared to FTX’s average of 13% running from 2019 to 2022.

Jardine notes that in 2014, when Mt. Gox collapsed, that centralized exchanges (CEXes) were the only players in the game, while at the end of 2022 almost half of all exchange flows were captured decentralized exchanges (DEXes) such as Uniswap and Curve.

Exchange inflow of CEX compared to DEX from 2013 to 2022. Source: Chainalysis

However, Jardine mentions that FTX was slow to gain market share, while Mt. Gox has been steadily declining, and that trading trajectory is worth considering, adding:

“Mt. Gox was becoming one of many exchanges during the category’s growth period, taking a smaller share of the larger pie. On the other hand, FTX was getting a bigger share of the shrinking pie and beating other exchanges even as its TX gross volume was declining.”

Despite this, Jardine concluded that Mount Gox was “a linchpin of the CEX category in an era dominated by CEXs”, making it a larger part of the crypto ecosystem at the time of its collapse than was FTX.

Jardine then goes on to explore the resurgence of the crypto industry after the fall of Mt. Gox and found that while transaction volume on the chain stagnated for about a year, activity soon picked up again.

Related: Sam Bankman-Fried says he is “deeply sorry” for the collapse in a letter to the FTX team

In February 2014, Mt. Gox suspended trading, shut down its website and filed for bankruptcy protection after losing 850,000 bitcoins (BTC) in the hack.

Customers who had holdings deposited on the exchange still have not received their funds back, but Mt. Gox Trustee announced on October 6, when creditors can choose their repayment method until January 10, 2023 150,000 BTC allegedly in their possession.

Monthly inflows of cryptocurrency services before and after the collapse of Mt. Gox. Source: Chainalysis

Jardine believes that although there are other factors such as Sam Bankman-Fried’s large public presence“the comparison should give the industry optimism”, as it boils down to market fundamentals, “there’s no reason to think the industry can’t bounce back from this, stronger than ever.”

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