The sudden collapse of the FTX exchange has sent shockwaves through the Bitcoin crypto world. The Bankman-Fried-led crypto empire hailed as an industry leader has filed for bankruptcy, sparking widespread panic in crypto circles.
This collapse was aided by Ian Allison’s article which revealed that about $5.8 billion of Almeda Research’s $14.6 billion in assets was tied to FTX’s exchange token FTT.
Record rise in Bitcoin wallets
BTC wallet holders, from small players to whales, increased their BTC holdings. The smaller wallets with less than one BTC added about 33,700 BTC this week. It saw the monthly increase up to 51,400 BTC.
This figure represents the second largest BTC inflow in history. This is because Crypto markets have become a bit more established lately.
The total capitalization of the crypto market also increased, reaching $880 billion.
The crypto market has enormous uncertainty. Recently, crypto investors had low confidence in crypto investments due to failed projects. However, the gains made in BTC have been a huge relief to investors in recent days.
Bitcoin holders are getting cautious
According to Glassnode reports this, major crypto exchanges are recording a huge drop in their total BTC balance. Shortage of 73,000 BTC; was registered by exchanges in a week.
Ethereum also registered a similar drop on exchanges, with a massive 1.1 million ETH in the past week. Major players such as Binance and Kraken have offered Proof of reserves. However, investors are now cautious since the FTX crisis.
Stablecoins, on the other hand, are now making huge profits. Stock market totals reached an all-time high of $41 billion last week. Tether (USDT) and Circle (USDC) stocks and reserves; recorded a decrease. Binance USD (BUSD) posted gains.
Most stablecoins have been liquidated to increase dollar liquidity, using smart contracts at a monthly rate of $4.63 billion.
A summary of FTX crash
Investors have been wary of the relationship between FTX and Almeda Research since they were both founded by Bankman-Fried. It is alleged that FTX has loaned up to $10 billion to Almeda.
These funds were used without investors’ knowledge. This marked one of the largest misappropriations of funds in history.
This shocking revelation was the last straw leading to a sudden investor exodus from FTX – the world’s second largest exchange. Binance founder Changpeng Zhao decided to withdraw his entire FTT holdings after this revelation, leading to widespread market chaos.
FTX crypto exchange processed $6 billion in withdrawals in just 72 hours. The downturn continued on fears that under the radar FTX had transferred money to Almeda as a loan to absorb losses.
The founder of rival exchange Binance, Changpeng Zhao, had previously expressed interest in acquiring FTX. However, the deal is now off. The suspension was based on irregularities in the company’s financial position.
FTX has officially suspended all cryptocurrency withdrawals. Federal financial authorities such as the Security Exchange Commission (SEC) have launched a full investigation into the matter.
Featured image from Medium, chart from TradingView.com
