Business Will Crypto Recover? 4 Crypto Experts Say What’s Next As Volumes Drop 2 Crypto daily trading volumes fell 50% after the collapse of FTX, according to data from Bloomberg and Kaiko.The fallout from Sam Bankman-Fried’s former FTX empire, once worth $32 billion, is weighing on investor sentiment.Insider spoke to four crypto experts about what’s next for the nascent industry.Loading Something is loading.Thanks for signing up! (adsbygoogle = window.adsbygoogle || []).push({}); Access your favorite topics in a personalized feed on the go.download the app (adsbygoogle = window.adsbygoogle || []).push({}); Cryptocurrency trading volumes plunged 50% following the sudden demise of FTX, the once $32 billion digital asset empire founded by Sam Bankman-Fried.
Daily average trading volumes on centralized exchanges fell from $26.7 billion in the week through Oct.30 to $13.1 billion in the seven days to Dec.
11, Bloomberg reported on Friday, citing data provider Kaiko.These include platforms such as Coinbase, Binance, Kraken, OKX, and Bitfinex, just to name a few.(adsbygoogle = window.adsbygoogle || []).push({}); (adsbygoogle = window.adsbygoogle || []).push({}); The drop in trading volumes comes at a critical time for the industry, which is experiencing a protracted and relentless bear market.According to Messari, the cryptocurrency market cap has fallen by nearly three-quarters of its value since last year, with bitcoin and ethereum down 75% from record highs in November 2021.User trust in exchanges is also in question after the demise of FTX.“FTX collapse brings us back to reality,” Shaban Shaame, founder and CEO of blockchain gaming developer EverDreamSoft, told Insider.“Cryptocurrency is a young industry.It is [the Wild] West where anything is possible, but also full of people with bad intentions and lack of rules.” FTX lost $8 billion in customer deposits after a Coindesk report revealed that the exchange’s native token FTT was used to support Bankman-Fried’s quantitative trading firm Alameda Research.
The trading titan’s balance sheet, which once had $14.6 billion in assets, was largely made up of a currency its sister company had fabricated — not an independent asset like fiat currency.This set alarm bells ringing.
Swarms of investors fled the exchange and liquidated their FTT holdings in one fell swoop, leading FTX and 130 other affiliated entities to face bankruptcy court last month.Investors can continue to avoid other centralized exchanges, Shaame says, parking their assets in non-custodial wallets, or wallets that allow users to manage their money independently of exchanges.
Either way, the industry will take one of two different paths, he added.“Either it will be highly regulated, like the traditional financial sector, or it will be more decentralized.Exchanges are like the banks of the old world, people entrust their money to them and no one controls them,” said Shaame.“A reliable solution such as decentralized exchanges exists, but it is not mature enough to support all use cases.” Shaame added, “The decline in trading shows that people are becoming aware of the ‘not your key, not your coin’ mantra and are moving to non-custodial exchanges.” FTX contamination could also wipe out bad players in the industry in the future, predicts another blockchain gaming exec, preparing the industry for success for the next market cycle.
“Many retail investors in the bull market have exited the market, leading to significantly lower trading volumes,” said Andreas Christensen, the founder of blockchain gaming developer SuperOne.“Investor FUD will remain until the next upward cycle, which will then be mass adoption for high-quality, transparent and compliant actors.” Christensen added, “In such a fragile bear market, a major criminal act like SBF did with FTX will have a serious impact on market sentiment and trading volumes.” Phil Wirtjes, head of strategy at digital asset trading platform Enclave Markets, says it’s not surprising given the recent turmoil that investors are “avoiding risk” as they assess how far contagion will spread.“Drying up credit lines and a lack of confidence in centralized locations mean lower liquidity, but we wouldn’t be surprised if volumes pick up again once certainty returns to the markets,” added Wirtjes.Finally, institutional and retail investor sentiment will continue to take the beating from the FTX fiasco, casting doubt on the industry’s credibility, according to a top economist at BTCM.
“Institutions like Fidelity and BlackRock are still slowly pushing their digital asset initiatives, while the majority of traditional institutions are in wait and see mode,” said Youwei Yang, chief economist at the publicly traded crypto mining company.He added: “However, most crypto veterans are used to this kind of market withdrawal and rest from previous circles and [are] still hangs in there.” (adsbygoogle = window.adsbygoogle || []).push({});.
