• As 2022 rolled in, FTX was on a winning streak as its sales kept improving despite the looming crypto winter
• Bitcoin has suffered more than a 10% loss in total market cap. Its current value stands at $16,915.70, its lowest price since 2021.
• Solana Total value locked(TVL) also suffered a 32.4 % loss as the tragic news swept the Web3 ecosystem

Tragedy has struck the crypto ecosystem as the year draws to an end. The crypto exchange platform FTX has suffered a massive case of crypto volatility. Unfortunately, things escalated as its value continued to drop further and further. What individuals thought was a single problem for certain users is now everyone’s problem.

The crypto ecosystem has severely suffered a massive blow. Bitcoin, Ethereum, Solana and many more have suffered dramatically from their competitor’s failure. With FTX virtually gone now, many thought its competitors would pick up the slack and fill the vacuum. Unfortunately, all it did was unravel the crypto space. Does this spell another great depression in crypto?

Gaining Recognition

Many might wonder how the entire crypto ecosystem is affected by the fall of a single crypto exchange platform. However, the crucial aspect is that this is not just any exchange platform. During its debut, FTX gained popularity beyond its time. In just under one year of operation, it had raised enough funds to acquire its mobile portfolio tracking application, Blockfolio, for $150 million.

This never-seen attribute significantly increased its usage for the past few years as more crypto traders began to learn about stock trading while also introducing stock traders to the world of crypto, a win-win strategy.

Also, Read FTX trading LTD finally hits rock bottom

By the time 2021 was ending, it had secured $900 million in funding, placing its total market cap at $18 billion, signed a sponsorship deal with the Mercedes Formula 1 team and received a grant from Singapore’s Temasek and Tiger Global.

As 2022 rolled in, FTX was on a winning streak as its sales kept improving despite the looming crypto winter. According to reports in the first month alone, FTX’s US arm is at $8 billion after raising $400 million in its first funding round from investors, including SoftBank and Temasek.

Its efforts might o have placed it on the top billboards like Bitcoin and Ethereum, but its significance and network steadily expanded. It was common for a crypto trader to be involved in FTX and other crypto coins. FTX then signed a $135 million sponsorship deal for naming rights of the Miami Heat’s home court.

FTX experienced a significant spike then, but July appeared to be the most profitable time for the crypto exchange platform. It went on to expand its reach as it purchased BlockFi at $240 million.

These small connections resulted in a netlike mesh between different t organizations and crypto traders. Loyal users of FTX significantly helped its fame as new members kept adding up, and its functionalities also offered an alternative if one was tired of crypto trading. Unfortunately, that’s where the end began.

How it’s connected

Its success attracted many crypto traders who wanted to experience and utilize the FTX mechanism. Crypto volatility depends on two key factors: Supply and demand. It generally means it depends on the number of crypto coins actively circulated and its market; how many crypto traders are actively purchasing its native coins.

From the previous section, we have seen FTX’s hard work in gaining its fame and recognition, allowing the bit to build its network of users and investors. It is essential to realize that crypto scams and hacks plague the crypto ecosystem. Crypto traders losing their life’s worth is an actual possibility and one that no crypto trader desires to take. 

Also, Read Is crypto mining experiencing an irreversible downfall?

Once the report claimed that FTX clients might not be able to withdraw their funds, the end started. This is taboo in any crypto exchange platform, and the scare worked like a charm. As if instantly, crypto traders began exiting FTX trading and cashing out; what started as a trend ended up causing a crypto meltdown. In under one month, FTX lost 75% of its original value. 

Remember, the crypto ecosystem is prone to such and others. This significantly affected the demand for almost every crypto coin as individuals began exiting the market and converting their crypto coins into fiat currency and stablecoins. The downfall of an influential powerhouse within the crypto exchange platform created a vacuum and a state of fear. The panic, unfortunately, reached other platforms.

How the rest are affected

This turn of events has adversely affected other crypto coins. Bitcoin has suffered more than a 10% loss in total market cap. Its current value at $16,915.70, its lowest price since 2021.

Its competitor, Ethereum, has also suffered a similar fate, dropping by at least 17% in value, now placing it at 74% of its original value since 2021. This sudden influx in crypto volatility has caused mayhem among crypto traders. To add salt to injury, different governments have started t question the applicability of set crypto regulations. 

We can sum up the primary cause of FTX to suspicious activities. They are not revealing the nature of FTX tokens’ operations and how they are stored or assigned, further escalating the claims and rumours around its user’s ability to access digital assets. A simple lack of trust goes a long way in the crypto ecosystem, and its consequences are finally here. 

Solana Total value locked(TVL) also suffered a 32.4 % loss as the tragic news swept the Web3. A severe case of crypto volatility. According to DefiLlama, at the time of writing, Solana’s TVL has fallen to $423.68 million, down 32.4% in the last 24 hours, a far cry from its all-time-high (ATH) of $10.17 billion on Nov. 9, 2021.

Also, Read A crypto crash to wipe out all fake protocols in the market

Solana-based liquid staking protocol Marinade Finance has also suffered a 35.1 % loss, significantly straining its network.

Conclusion

Despite this sudden drop, Ethereum and Bitcoin have suffered worse cases of crypto volatility. During GlobalCovid-19 restrictions, both crypto exchange platforms suffered a 37.43% and 42% loss, respectively.

The fall of Celsius resulted in an 8% and 12% loss, and somehow these two titans kept going. The difference between the then and now is the additional factors contributing to its failure. 

The rise and fall of crypto exchange platforms is no everyday news; plenty had seen former titans such as MT Gox completely shut down, so when the rumours surrounding FTX came in, the inevitable landslide began.

There is still hope, and many crypto traders are still active. We can only wait for these titans(Bitcoin and Ethereum) to bounce back and continue dominating the crypto world.

Also, Read FTX Exchange: A platform that combines the stock and cryptocurrency markets.