Chainalysis Reports Crypto Market Fundamentals Remaining Stable Despite FTX Drop
FTX, a popular cryptocurrency exchange, was once considered one of the pioneers of the crypto sector. However, it met its sudden end just last week when rumors of its insolvency began to surface in the market. Millions of investors immediately panicked and continued to sell their cryptos out of fear. As a result of the sudden collapse of the exchange, the market once again suffered another strong bearish trend.
Cryptocurrencies were already hit hard due to various reasons. The exchange stopped withdrawals and the funds of several users were frozen. As a result of the whole FTX fiasco, many investors in the crypto market have lost their confidence in active cryptocurrency trading for fear of losing their assets. People started criticizing the digital asset industry and pointing out its vulnerabilities.
Fundamentals of the Crypto Market Remain Stable
Although several companies face the threat of insolvency, the report of chainalysis paints a positive picture of the crypto market. Chainalysis took it to Twitter and categorically mentioned that despite the FTX fiasco, the fundamentals of the cryptocurrency market have remained stable. However, it is clear that the main reason for the collapse of FTX was the improper and fraudulent management of the funds. Therefore, it was not due to any possible failure of the blockchain.
1/ We’d like to provide updates on some of the market indicators we’re watching following the collapse of FTX last week. https://t.co/fo4JuVWiQd
—Chainalysis (@chainalysis) November 16, 2022
Considering the current situation, it seems that users are abandoning cryptocurrency trading at the same percentage as before the FTX crash. Additionally, net inflows on centralized exchanges have declined sharply. This suggests that users actively withdraw more funds than they actually deposit.
These users are opting for self-custody this time. However, a smaller percentage is still being sent to some centralized exchanges, and there have been observed spikes in movement to personal wallets. The move can be considered a precautionary measure by cryptocurrency consumers.
Stablecoins are an integral part of the world of cryptocurrencies, holding a constant value of $1. Following the FTX crash, some stablecoins were affected and witnessed a decline in their total value. Not only that, but many companies with investments in FTX faced considerable losses when the exchange went bankrupt. Most of them had to reduce their total workforce to survive in the already difficult crypto market. Some Business they also stopped withdrawals to deal with the mess created by FTX.