Bitcoin Dealing with FTX Crash

The month of November was an important test for the cryptocurrency world and in particular for Bitcoin, what happened to FTX brought the market down but BTC reacted well in some respects.

The consequences suffered by the market after the failure of FTX are similar to those already experienced after the failure of Terra, but on a larger scale. 

The market that boasted a total capitalization that was now close to $3 trillion lost about two-thirds by touching $900 billion. 

Investing is complicated anywhere though; while it is true that the cryptocurrency market has suffered capital outflows, the stock market is also not in good shape, and continued interest rate hikes by the Fed and other central banks do not help.

Bitcoin plunged back -16.3%, recording the lowest monthly performance since June this year. 

In November, digital gold recorded the largest exits from exchanges since its inception, 91,557 BTC exited the platforms.

Following FTX, centralized exchanges have suffered many defections despite attempts to secure capital. 

In November, BTC hit a low at $15,480 and ETH fell to $1074 on the 23rd of the month.

Bitcoin’s value after the fall of FTX

The leading currency by capitalization and the top of the decentralized ones now turns 13, and while many are turning to Proof of Stake, it still dominates despite the fact that the Proof of Work on which it is based is not the most beloved by the green party that dominates the ruling classes. 

In February 2021, it was the first cryptocurrency to reach a trillion-dollar valuation and, despite the fact that the FTX debacle brought major aftershocks, it has held up well proving that the $15,000 threshold is hard to climb and could be considered (perhaps) the base value of the currency.

The FTX collapse caused huge problems for the entire cryptocurrency world by wiping billions of dollars off the market.

The fear of contagion caused problems not only for Bitcoin, but also for other currencies and mainly for other trading platforms showing the fragility of certain companies and leading to a natural skimming.

US stocks as opposed to crypto 

By contrast, the S&P 500 and NASDAQ benefited from lower inflation than expected and returned to the green.

The Fed has stated that we may have arrived at the point where we need to rethink rate hike policy, which may take a softer path with smaller, targeted increases further apart in time starting with the next one that many analysts give for 50 basis points. 

Over the past month, the top four currencies by capitalization have experienced a significant increase in volatility.

Solana and ADA in particular have underperformed BTC and ETH with returns of -56.7% and -30.8%, respectively.

Volatility went crazy after the damage of Sam Bankman-Fried and his companies, making November one of the most volatile months ever, with SOL, for example, even reaching a volatility of 241% much higher than that of Bitcoin, which has only, so to speak, doubled. 

The total market capitalization of the four major currencies hit its lowest since 2020 at $495 billion. 

However, at the end of the month, the recovery began again, which data confirm has already reached 5% in terms of volume.

After the watershed date of 8 November which marked the debacle of Sam Bankman-Fried‘s exchange platform, centralized exchanges collapsed due to panic over deposit security and hedging.

As for CEXs, Bitcoin touched the worst performance in its history, -91,557 BTC, and the trend suffered a prolonged continuation. 

Bitcoin mining and metrics

Bitcoin’s average hashrate last month fell 20.7% to 210 TH/s, achieving the largest drop since 2022.

After a high of 317 million recorded at the beginning of the month, hashrate returned to lows at 203 million TH/s on 26 November.

Mining difficulty also increased, touching an all-time high of 37.0tn. 

Rising energy prices also contribute to the capitulation and Miners in general. 

Wrapped Bitcoin (WBTC), a token that allows Bitcoin to be used for DeFi on other blockchains lost its peg in November touching its lowest point since August two years ago. 

The reason for WBTC’s depeg is mainly related to the failure of FTX, which after Binance was the largest reference market. 

Analysts believe that the depeg cannot fall below 0.95 again since WBTC is 1:1 with Bitcoin.

Still, even though ETH reported significant declines as seen above, it showed greater resilience to the shocks of the FTX affair by remaining above the June lows. 

Ethereum’s performance over the past six months has outperformed that of Bitcoin by 22.4% versus -10.8 %.

Daily average ETH transactions, however, fell 5.30% in the last month to 1.04 million average daily transactions. 

The figure is the second worst in two years and provides a measure of the severity of what FTX has done. 

With the average transactions though, also the average daily fees declined, falling to $2.86 reporting a 93.9% drop from the peak of the same period last year.