What’s the Current State of the Cryptocurrency Market?

While the whole cryptocurrency world is recovering from the shock related to the news about the collapse of crypto exchange FTX, bitcoin still shows a good level of stability. Despite all of this, huge transactions still are noticeable in the network which facilitates plummeting of the currency.

Whale Alert found a big transaction

Recently a huge transaction was tracked at the exchange Binance: the sum surpassed a billion dollars. This fact was noticed by the tracking service Whale Alert. According to the service, 68,200 BTC were received on the biggest crypto exchange in the world Binance from an unknown wallet. Their total value is equal to ~$1,150,000,000 at the current exchange rates.

No one knows why this transaction was made but there is one thing known for sure — if these bitcoins are sold, BTC’s value will plummet. The CEO of CryptoQuant tried to explain this transaction as he is the head of the company that analyzes the market.

The CEO of CryptoQuant believes that the transaction was received from a client but not the head of the exchange Changpeng Zhao as many might have thought. Now the market is in the state when major clients want to keep their assets and trade bitcoins for fiat. The cryptocurrency has been surrounded by rather negative news recently which generates investors’ fear. Young Ju also mentioned that representatives of Binance had not commented on the transaction in any way, so the transaction must have been made by a client and not the head of the cryptocurrency exchange.

Whale Alert also noticed other cryptocurrency transactions. One of them was made by the platform Coinbase to an unknown wallet in size of 1,185 BTC (~$20,000,000), another one was made from an unknown wallet to Coinbase in size of 2,056 BTC (~$35,000,000). One more large transaction of 19,035 BTC (~$318,000,000) was made from one unknown crypto wallet to another.

We are in a downward

Now the cryptocurrency market is in a global downward trend. According to many analytics, the bear market should terminate at the end of this year or in the first-second quarter of 2023. Lots of influencers also said that a so-called “to the moon” was about to start, however, the crypto market was hit by the news that could be treated as a black swan.

Again FTX? How do they fit in?

The American exchange FTX collapsed and ensued tremendous consequences that have been haunting the cryptocurrency market for two weeks. The cryptocurrency exchange had big debts and, despite its good position, the platform managed to succeed at the international market and then failed. Samuel Banckman-Fried, who used to be the head of the company, had to resign and start the process of case hearing about FTX’s bankruptcy.

He was replaced by John Ray III who said that in 40 years of participation in bankruptcy cases he had never seen any similar case. The blame is on incompetent actions from Samuel Banckman-Fried who, to his mind, became the reason of FTX’s collapse. He also reported that the American exchange did not consider such scenarios and the protection of accounting and technical components was very week. Besides, according to John Ray, not only Samuel Banckman-Fried was incompetent but also his team in charge of the development of the exchange.

How could FTX’s collapse affect not only clients of the exchange but also the whole cryptocurrency market? There are a few reasons. At first, the exchange FTX kept funds of many startups that collapsed along with the American exchange. To exemplify, take a look at the services Maps.me and Oxygen who kept 95% of funds in FTX’s assets.

The second reason is the panic that overtook many investors after it was passed in a chain reaction. Consequently, the platform fixed numerous withdrawals. Before FTX faced major problems and loss of the token of 90%+, the exchange could not pay their clients. Right after that crypto enthusiasts started withdrawing money to check if Binance could withdraw funds. Due to the panic, investors could fix their loss but started withdrawing the main digital asset from the exchange to their cold wallets and online wallets from.

The third reason of FTX’s influence on the crypto market is the dragged bear market. The whole cryptocurrency world demonstrates a downward global trend that decreases the number of people who are ready to invest in cryptocurrency, and the occurrence related to the American exchange intensified the effect.

Every cloud has a silver lining

These events attracted a part of the audience that found them advantageous. While clients of FTX suffered a severe loss, traders who noticed that something was wrong on 7 November managed to turn FTT’s drop (a token of the exchange FTX) into an advantage and entered short positions. Risky traders that managed to enter a short with the shoulder 25х, that was available at that moment, managed to earn a fortune. From $22,5 for a coin, the token dropped to $4,55 in 2 days which is equal to 80% drop. Consequently, this drop could have made 5х profit, and 10х, 15х and even 20-30х.

Speaking of not only trading, we can remember the companies that provide the service of keeping digital assets. At the moment when investors started to prefer keeping their assets on the wallet by discarding the idea of storing the funds at the official exchanges, the price of TWT (the token of Trust Wallet). Due to their popularity and the trust, early investors in TWT managed to make 10х profit and more.

Remember about risk

Anyway, the situation with FTX again shows that all crypto enthusiasts, no matter they are owners of big balances or beginners, should not forget about risk management and money management. Following simple rules about avoiding risks and diversification of their money can help to evade fatal mistakes that can deprive not only the desire to deal with cryptocurrency but also colossal sums of money.