Crypto Analysts Lament Why FTX Fallout Will Worsen

According to analysts, 2022 has been an unprecedented crypto market contagion, and the worst is not over yet. The fallout from the FTX collapse could still cause much more damage to the industry.

It has been a string of bad news following bad news for the crypto industry in 2022. As a result, the FUD (fear, uncertainty, and doubt) is very real and running at unequaled levels.

Since the FTX contagion began on Nov. 6, crypto markets have dumped almost $240 billion, or more than 20%. Markets hit a new cycle bottom on Nov. 10 and are at risk of falling further.

Industry experts have been lamenting the biggest black swan event in crypto history.

FTX Fallout Will Worsen

According to crypto venture firm Multicoin Capital, the FTX collapse will cause many additional failures. In a letter to investors on Nov. 17, the company admitted, “we put entirely too much trust in our relationship with FTX.”

Managing partners Kyle Samani and Tushar Jain said, “many trading firms will be wiped out and shut down,” according to CNBC.

“We expect to see contagion fallout from FTX/Alameda over the next few weeks.”

On Nov. 18, industry analyst Miles Deutscher told his 254,000 followers that the FTX collapse was “one of the biggest black swan events in crypto history.”

Furthermore, he gave several reasons why things are about to get worse. Exchange exposure is an issue; many exchanges have yet to declare how much exposure they had to FTX. There has also been a breakdown in trust from exchange users who have been pulling funds to self-custody.

Furthermore, market maker failure could cause severe liquidity problems across the entire industry. Likewise, fund collapses due to their exposure to Alameda and FTX. Sino Global, Pantera Global, Sequoia Capital, Ikigai, and Multicoin Capital all had toxic exposure.

Centralized lenders have also been battered by the FTX collapse, especially those that used the FTX token as collateral, such as Genesis.

Doom and Gloom

On Nov. 18, CryptoQuant co-founder Ki Young Ju commented on one of these doom and gloom threads.

“The end of this doomporn loop would be Satoshi’s dumping.”

The anonymous Satoshi still holds 5.7% of the Bitcoin supply, he added before commenting, “his biggest mistake is he didn’t burn his mined coins.”

These doom loops are nothing new for crypto. After all, Bitcoin has died 466 times, according to 99Bitcoins. Nevertheless, this current round of doom and gloom appears to be more severe than we’ve seen before.

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Source: https://beincrypto.com/crypto-analysts-lament-why-ftx-fallout-worsen/