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How FTX’s Collapse Affected the Crypto Market: A Kaiko Report

FTX, one of the largest crypto exchanges in the world, collapsed in November 2022, causing a huge shock to the crypto industry. A new report by Kaiko, a crypto analytics firm, analyzes the impact of FTX’s collapse on the global crypto market.

kaiko ftx

The report reveals that FTX’s collapse reduced the global crypto liquidity by half in a week, creating a gap in the market that was filled by other exchanges like Coinbase and OKX. This gap, dubbed the “Alameda Gap”, refers to FTX’s sister firm Alameda Research, which was a major market maker and liquidity provider.

The report also shows that FTX’s native token FTT suffered a massive price drop of over 95%, from around $25 to $1.2, and has not recovered since4. Many investors lost their funds stored on FTX, as well as their exposure to FTT.

The report concludes that FTX’s collapse had a lasting effect on the crypto market, as the market depth is still at half of what it was before the incident. The report also suggests that Bitcoin’s dominance in U.S. markets increased to 71% last month, indicating that institutional traders preferred Bitcoin over other crypto assets amid rising real yields and worsening risk sentiment in traditional finance.

Hopefully this is the last bad event of this Bear cycle and we all are waiting for the #Bitcoin ETF’s approval to spark another Bull run!