Could the impact of FTX’s Collapse be any more profound? In November 2022, the cryptocurrency world was shaken by the sudden collapse of FTX. This event had far-reaching effects, including a significant shift in market share and a dramatic plunge in the value of FTX’s native token, FTT. This article delves into the aftermath and explores the current state of the crypto landscape post-FTX’s downfall.
Market Share Redistribution After FTX’s Collapse
The collapse of FTX had an immediate and striking impact on the global crypto market. Notably, it created an opportunity for other centralized crypto exchanges such as Coinbase and OKX to reclaim a significant portion of both the crypto spot and derivatives market share. This shift occurred in the wake of what came to be known as the ‘Alameda Gap’, a term coined in reference to the sudden drop in global crypto liquidity following FTX’s demise.
The ‘Alameda Gap’ and its Effects
Following FTX’s Collapse, the global crypto liquidity fell by 50% within a week. This phenomenon, dubbed the ‘Alameda Gap’, refers to the sharp decrease in liquidity on crypto exchanges globally. The term pays homage to Alameda Research, FTX’s sister company, which was established by Sam Bankman-Fried as a quantitative crypto trading firm. Despite some time having passed since the incident, the crypto market depth remains at only half of its pre-collapse state, indicating that the ‘Alameda Gap’ has not yet been bridged.
FTT’s Dramatic Decline
FTX’s downfall also led to a severe decline in the price of its native token, FTT. Prior to the collapse, FTT was trading between $20 to $30. However, data from CoinMarketCap reveals that it now stands at a meager $1.2, representing a drop of over 95%. This massive devaluation has significantly impacted many investors who had stored their crypto assets on FTX.
As the crypto landscape continues to evolve post-FTX, there is a silver lining. For instance, Bitcoin’s market dominance in U.S. markets has surged to its highest level since October 2022, reaching 71% last month. This suggests that amidst surging real yields and a deteriorating risk sentiment in traditional finance, institutional traders are favoring Bitcoin.
For those seeking to navigate this ever-changing landscape, a tool like cryptoview.io can prove invaluable. It offers a comprehensive view of the crypto market, helping users stay informed and make strategic decisions.
