Will Crypto recover? 4 Crypto Experts Say What’s Next As Volumes Fall

[ad_1]

Crypto daily trading volumes plunged 50% after FTX collapsed, according to data from Bloomberg and Kaiko. The fallout from Sam Bankman-Fried’s once $32 billion FTX empire is weighing on investor sentiment. Insider spoke to four crypto experts about what’s next for the fledgling industry. LoadingSomething is being loaded.

Thank you for your registration!

Access your favorite topics in a personalized feed on the go. download app

Cryptocurrency trading volumes plummeted 50% after the sudden downfall of FTX, the once $32 billion digital asset empire launched by Sam Bankman-Fried.

Average daily trading volumes on centralized exchanges fell from $26.7 billion in the week to Oct. 30 to $13.1 billion in the seven days to Dec. 11, Bloomberg reported Friday. , citing data provider Kaiko. These include platforms such as Coinbase, Binance, Kraken, OKX, and Bitfinex, to name a few.

The drop in trading volumes comes at a pivotal time for the industry, which is enduring a prolonged and brutal bear market. The cryptocurrency’s market capitalization has shrunk nearly three-quarters from its value since last year, according to Messari, with bitcoin and ethereum down 75% from November 2021 highs.

User confidence in exchanges is also in question after the fall of FTX.

“FTX’s collapse brings us back to reality,” Shaban Shaame, founder and CEO of blockchain game developer EverDreamSoft, told Insider. “Cryptocurrency is a young industry. It is [the Wild] West where anything is possible but also full of bad people and no rules.”

FTX lost $8 billion in customer deposits after a report from Coindesk revealed that the exchange’s native FTT token was used to back 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 coin that its sister company made up and not an independent asset like fiat currency.

This rang the alarm bells. Swarms of investors fled the exchange and liquidated their FTT holdings all at once, landing FTX and 130 other related entities in bankruptcy court last month.

Investors may continue to shun other centralized exchanges, Shaame says, and park their assets in non-custodial wallets, or ones that allow users to control their funds independently of exchanges.

Regardless, the industry will take one of two different paths, he added.

“Either it will be heavily regulated like the traditional financial industry or it will be more decentralized. Exchanges are like old world banks, people trust them with their money and nobody audits them,” Shaame said. “A trustless solution like decentralized exchanges exists but is not mature enough to support all use cases.”

Shaame added: “The drop in exchanges shows that people are realizing the ‘not your key, not your coin’ mantra and moving to non-custodial exchanges.”

The FTX contagion could also weed out bad actors in the industry in the future, another blockchain gaming executive predicts, setting the sector up for success in the next market cycle.

“Many retail investors in the bull market exited the market, which led to a significant drop in trading volumes,” said Andreas Christensen, the founder of blockchain game developer SuperOne. “Investor FUD will remain until the next ascending cycle, which will then be mass adoption for high-quality, transparent and compliant players.”

Christensen added, “In such a fragile bear market, a large-scale criminal act like SBF did with FTX will have a severe impact on market sentiment and trading volumes.”

Phil Wirtjes, head of strategy at digital asset trading platform Enclave Markets, said given the recent turmoil, it’s no surprise that investors are “safe from risk” as they assess how far the contagion will spread.

“Drying up credit lines and lack of confidence in centralized locations is driving liquidity down, but we wouldn’t be surprised to see volumes increase once certainty is reintroduced to markets,” added Wirtjes. .

Finally, institutional and retail investor sentiment will continue to feel the effects of the FTX fiasco, questioning the credibility of the industry, a leading BTCM economist said.

“Institutions like Fidelity and BlackRock are still slowly but steadily pushing their digital asset initiatives, while the majority of traditional institutions are in ‘wait and see’ mode,” said Youwei Yang, chief economist at the crypto firm. listed mining.

He added, “However, most crypto veterans are used to this type of market decline and calm from previous circles and [are] still hanging in there.”

[ad_2]