The sudden collapse of the FTX exchange has sent shock waves across the bitcoin crypto world. The Bankman-Fried-led crypto empire, regarded as an industry leader, has filed for bankruptcy, creating widespread panic in crypto circles.
The collapse was aided by an article by Ian Ellison that showed that approximately $5.8 billion of Alameda Research’s $14.6 billion in assets was tied to FTX’s exchange token FTT.
bitcoin wallet record growth
BTC wallet holders ranging from small players to whales increased their BTC holdings. About 33,700 BTC were added to small wallets with less than one BTC this week. It saw a monthly increase of up to 51,400 BTC.
This figure represents the second largest BTC inflow in history. This is because crypto markets have become a bit more settled recently.
The total capitalization of the crypto market also increased to $880 billion.
There has been a huge uncertainty in the crypto market. Until recently, crypto investors had less confidence in crypto investments due to failed projects. However, the gains registered in BTC in recent days have brought huge relief to the investors.
Be careful bitcoin holders
According to glassnode report, major crypto exchanges have reported a massive drop in their total BTC balances. 73,000 BTC shorted; was recorded by the exchanges in a week.
Ethereum also recorded a similar drop on exchanges with 1.1 million ETH traded in the past week. Big players like Binance and Kraken have offered proof-of-reserve. However, investors are now cautious since the FTX crisis.
On the other hand, stable coins are now registering massive gains. The total held across all exchanges reached an all-time high of $41 billion last week. Tether (USDT) and Circle (USDC) supply and reserves; registered a decline. Binance USD (BUSD) registered gains.
Most of the stablecoins liquidated to increase the liquidity of the dollar using smart contracts at a monthly rate of $4.63 billion.
A recap on the FTX crash
Investors were wary of the relationship between FTX and Alameda Research because they were both founded by Bankman-Fried. It is alleged that FTX loaned up to $10 billion to Almeida.
These funds were used without the knowledge of the investors. This signaled the largest embezzlement of funds in history.
This shocking revelation was the last straw in the sudden exodus of investors from the world’s second largest exchange – FTX. Following this revelation, Changpeng Zhao, the founder of Binance, decided to divest his entire FTT holding, causing widespread chaos in the market.
The FTX crypto exchange handled $6 billion worth of withdrawals in just 72 hours. The decline continued amid fears that FTX had transferred funds under the radar to Alameda in the form of loans to cover losses.
Changpeng Zhao, the founder of rival exchange Binance, previously announced interest in acquiring FTX. However, the deal has now closed. The suspension was based on irregularities in the financial position of the company.
FTX officially suspended all crypto withdrawals. Federal financial authorities such as the Security Exchange Commission (SEC) have launched a full investigation into the matter.
Featured image from Medium, chart from TradingView.com