Cryptocurrency trading volumes have halved after FTX went bankrupt in November. Now 4 crypto experts are explaining the next step for the market with waning interest since the crash.
Experts explain what’s next, with trading volumes dropping 50% after FTX
Average daily trading volume on centralized exchanges fell from $26.7 billion in the week to October 30 to $13.1 billion in the seven days to December 11, Bloomberg reported on Friday, citing data provider Kaiko. These include giants like Coinbase, Binance, Kraken, OKX and Bitfinex.
The decline in trading volumes comes at a crucial time for cryptocurrencies that have endured the bear market for a long time. The total value of the cryptocurrency market has lost about three-quarters since last year, according to Messari. Meanwhile, Bitcoin and Ethereum have dropped more than 75% from ATH levels in November 2021.
User confidence in exchanges is also questioned after FTX’s bankruptcy
“The FTX crash brings us back to reality,” says Shaban Shaame, CEO of blockchain game developer EverDreamSoft. “The cryptocurrency market is a young industry. “The Wild West, where anything is possible, but also with malicious people and no rules.”
As a reminder, a November Coindesk report revealed that FTT was used to support one of Bankman-Fried’s companies, Alameda Research. After that, FTX lost $8 billion in client funds. It turned out that Alameda’s balance sheet, which was once up to 14.6 billion, consisted of a token produced by FTX. This set off the market alarm bells. Hordes of investors fled the stock market. FTT liquidated its assets at once. Last month, FTX and 130 other related entities filed for bankruptcy.
Shaame says investors will continue to flee from other centralized exchanges. She sees that people will switch to cold wallets instead of exchanges. “Regardless, the industry will go one of two ways,” he adds. Some of his statements on the subject were as follows:
It will either be tightly regulated like the traditional financial sector or have a more decentralized structure. Stock markets are like banks of the old world, people entrust their money to them and no one monitors them. There is a trustless solution such as decentralized exchanges (DEX), but it is not mature enough to support all use cases.
Experts say the crash is preparing the next crypto bull
Shaban Shaame, CEO of EverDreamSoft, said going forward after his above statements, “The drop in trading volume indicates that people are switching to non-custodial exchanges.” Another Blockchain game executive predicts that the FTX bankruptcy could weed out bad industry players in the future. He also says that he is preparing the industry for success for the next market cycle. Here are some thoughts from Andreas Christensen, founder of SuperOne:
Many bull market retail investors have left the market resulting in significantly lower trading volumes. Investors’ FUD will continue until the next up cycle, which will be a big buy for high quality, transparent and compliant actors… In such a fragile bear market, a massive criminal action like SBF did with FTX will have an impact on market sentiment and trading volumes. will have a serious impact.
Phil Wirtjes, head of strategy at digital asset trading platform Enclave Markets, says the reaction from investors is normal. The veteran thinks it’s not surprising that investors who fear losses are “risk averse”. His thoughts on the subject were as follows:
Drying credit lines and lack of trust in centers are causing lower liquidity, but we wouldn’t be surprised to see volumes increase when certainty is restored to the markets.
BTCM economist says companies are used to bankruptcies
Finally, a senior economist at BTCM said that institutional and individual investor sentiment will continue to be hit by the FTX debacle, questioning the credibility of the industry. “Institutions like Fidelity and BlackRock are still slowly but steadily pushing through crypto startups, while most traditional institutions are in a ‘wait and see’ mode,” says Youwei Yang, chief economist at the public crypto mining company. “However, most crypto veterans are used to this kind of market slump and silence from previous circles and it still hangs there,” he adds.
cryptocoin.comAs you follow, the collapse of FTX was followed by companies like Digital Currency Group (DGC). Rumors that Genesis, which came to the fore with bankruptcy rumors, had melted its reserves, triggered double-digit sales on the weekend of 16 December.
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