Chainalysis predicts that the collapse of FTX will have a less significant impact on the cryptocurrency ecosystem than the collapse of Mt. Gox.
Is FTX bankruptcy collapse?
Chainalysis, a blockchain analysis company, compared FTX’s bankruptcy to the collapse of Mt. Gox to assess how it will affect the ecosystem.
It concluded that FTX represented a relatively lesser portion of the cryptocurrency market than Mt. Gox did then and that the market would recover more powerfully than ever.
Eric Jardine, research lead at Chainalysis, first compared the market shares of the two companies in a thread on Twitter on November 23. He discovered that Mt. Gox averaged 46% of all exchange inflows in the year before its 2014 collapse, compared to FTX’s average of 13%, which ran from 2019 to 2022.
When Mt. Gox failed in 2014, centralized exchanges (CEXes) were the only players in the market, according to Jardine. By late 2022, however, decentralized exchanges (DEXes), such as Uniswap and Curve, had seized roughly half of all exchange inflows.
Why FTX was slowly increasing?
However, Jardine points out that while Mt. Gox’s market share was progressively declining, FTX’s was slowly increasing and that business trajectories are essential to take into account, adding:
“During a period of expansion for the category, Mt. Gox was becoming one exchange among many, taking a smaller piece of a larger pie. While other exchanges were losing market share, FTX was increasing its part of the pie and outperforming them.
Read more: Will Crypto and NFTs Ever Rule the World?
Despite this, Jardine determined that Mt. Gox was a more significant component of the crypto ecosystem at the time of its collapse than FTX because it was a “linchpin of the CEX category at a period when CEXes dominated.”
The recovery of the cryptocurrency market following the collapse of Mt. Gox is then examined by Jardine, who discovered that activity quickly resumed after a year or so of stagnation in on-chain transaction volume.
Why does Sam Bankman say it’s a “deepest regret”?
In a letter to the FTX team, Sam Bankman-Fried +expresses his “deepest regret” for the disaster.
After losing 850,000 Bitcoin BTC, Mt. Gox stopped trading, shut down its website, and filed for bankruptcy protection in February 2014.
NASDAQ is down $16,681 when hacked.
Customers who deposited holdings on the exchange have still not received their money back; however, the Mt. Gox Trustee declared on October 6 that creditors had until January 10, 2023, to choose a form of payment for the allegedly held 150,000 BTC.
The comparison, in Jardine’s opinion, “should give the industry optimism,” as when it comes down to market fundamentals, “there’s no reason to think the industry can’t bounce back from this, stronger than ever,” despite the existence of other factors such as Sam Bankman-Fried’s prominent public profile.
Conclusion
FTX represented a relatively lesser portion of the cryptocurrency market than Mt. Gox averaging 46% of all exchange inflows in the year before its 2014 collapse, compared to FTX’s average of 13%, which ran from 2019 to 2022.
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