On Nov. 24, analytics firm Chainalysis ran the Mt.Gox comparison as it wasn’t the first time the crypto world was rocked by a stock market crash.
Mt. Gox was the first Bitcoinstock exchange, but it collapsed in February 2014. Crypto survived and thrived, and will do so again despite all the mainstream media FUD.
The Japan-based exchange was hacked in early 2014, resulting in a loss of around 750,000 BTC, or 6% of total supply at the time.
1/ Overall picture: The collapse of FTX has the #crypto Market. However, this isn’t the first time crypto has faced significant turmoil related to an exchange’s collapse.
— chain analysis (@chain analysis) November 23, 2022
Mt. Gox vs. FTX
When comparing the two, note that Mt.Gox had a larger market share than FTX with 46% of exchange inflows compared to 13%.
chain analysis said that Mt.Gox was objectively a bigger player in the industry, which is good because its collapse didn’t destroy crypto.
One difference is that Mt.Gox’s market share was declining while FTX’s was increasing. This could mean that the FTX collapse was a major psychological hit to confidence.
Furthermore, in 2014, crypto services were limited to a handful of exchanges, while today they are much more diverse, with DEXs capturing almost half of all exchange flows by late 2022.
After collapsing eight years ago, on-chain transaction volume stagnated for about a year but soon bounced back, doubling pre-Mt.Gox levels. This time, crypto investors have moved assets from exchanges to self-custody.
“This comparison should make the industry optimistic. Mt. Gox was a larger part of the crypto ecosystem when it collapsed in 2014 compared to FTX now and while the impact on the market was bad, it recovered relatively quickly.”
Another factor was that SBF was considered one of the leading faces of crypto. But as traders and investors have learned painfully, putting all of their trust in a centralized system run by one person could prove to be a really bad idea.
Additionally, crypto has been diluted through lending and leverage, increasing the house of cards effect when collateral is questionable, which was the case with FTX.
Chainalysis concluded that the crypto industry survived worse than FTX’s fall, so there’s “no reason it can’t bounce back from this stronger than ever.”
Outlook on the crypto market
Since its bear cycle bottom earlier this week, the total market cap has rallied by $44 billion. Markets are up 3% on the day and the total cap is now $865 billion, but this is still deep in bear territory.
Bitcoin prices were up 2.3% to $16,564, and Ethereum up 4.6% and was trading at $1,184 at the time of writing.
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Source: Crypto News Deutsch