Market MakingVenture CapitalAbout Us

Why the cryptocurrency market is down

Dec 15, 2022
/Table of contents

Marketing Batman

As you already know, the situation associated with the fall of the FHT cryptocurrency continues to negatively affect the state of the entire cryptocurrency market. How will events develop further?

In this article, we will analyze why the cryptocurrency market continues to fall today, what are the reasons for this and what will be the consequences.

After the fall of such giants of the cryptocurrency market as FTX and Alameda, almost all areas sank heavily, the changes affected the entire market.

This situation led to the fact that, for example, the company Digital Currency Group experienced an acute shortage of liquidity. The mood of cryptocurrency investors and traders affects the volatility of currencies. The situation can be described as uncertain, as market participants are confused and do not understand which market makers should be trusted and which not.

Why is the cryptocurrency market going down and what does the FCS exchange have to do with it -  let’s read the article to find out the answer

What up with the crypto market: the real situation

The cryptocurrency market previously had a capitalization of $1 trillion. But the situation has changed radically recently. Today, the volume of cryptocurrency capitalization is 870 billion dollars. This significant drop in such a short period of time woke up like a real hurricane throughout the market.

What just happened to the crypto markets: the situation between Binance and the FCS has heated up the market to the limit

The main reason for this decline is called the fall of the large crypto exchange FTX. The company was called too big and too unsuccessful. Concerns about its solvency are confirmed every day, because the price of the tokens of this exchange is rapidly falling. The percentage drop has already exceeded 80.

Despite the fact that the largest cryptocurrency exchange, Binance, had in its plans a potential purchase of part of the assets of the FTX, it nevertheless abandoned this idea. The CEO of Binance said that the results of a corporate due diligence and US investigation into the misuse of customer funds by the FTX led to the fact that the transaction to acquire the assets of the FTX will not be made.

After this statement, the price of FTX tokens continued to fall rapidly. This led to the fact that the owner of the FTX, Sam Bankman-Fried, lost 94 percent of his capital, he was excluded from the Bloomberg Billionaires Index.

It may seem to many that the bankruptcy of the FCS happened overnight, but it is not. Let's take a look at why, did it really happen overnight?

The CEO of the FTX regularly used the capital of the exchange's users to invest in its subsidiary Alameda Research. This has been going on for a long time and there can be no justification for this, all companies that have ever cooperated with the FTX, as well as traders and investors who have invested their capital in the exchange, have been put under attack.

What awaits the cryptocurrency market in the future

It is safe to say that this situation will not go unnoticed by the market. All the previous scandals that affected the liquidity of both bitcoin and altcoins in one way or another will seem like flowers compared to the FTX scandal.

Let's see who will be affected by the consequences of the FTX scandal.

  • First of all, these are companies that have closely cooperated with the Federal It is important to understand that a domino effect can work and a wave of bankruptcies awaits us.
  • Large investors.
  • Ordinary traders who dealt with cryptocurrencies based on the FTX.

As a result of the current crisis, there will certainly be changes that will change the cryptocurrency market and, hopefully, help it grow and develop with even greater force.

Best case scenario:

  • The crisis will allow the market to get rid of unstable projects and pyramids, which made the situation unstable and did not allow the market to grow qualitatively.
  • The crisis will make the cryptocurrency market more transparent, understandable and safe for investors due to closer attention to the activities of companies.

What to do to avoid getting hit after FTX crises

As we said, the crisis after the collapse of the largest cryptocurrency exchange in the world will inevitably affect everyone, but there are ways to help you avoid a negative impact on your investment portfolio.

Don't keep all your assets in one place The rule is as old as the world. Of course, every expert in the cryptocurrency world has said that if you want to save your assets, then it is worth trading on trusted well-known exchanges. And now one of these FTX exchanges is on the verge of bankruptcy and it is not known when it will return its debts. Therefore, under no circumstances should you work on only one exchange. This will help you, if not to avoid losing money in the event of a crisis, then at least to reduce losses.
Check the sites you want to work with. In particular, this applies to medium-sized companies and start-ups. Analyze the comments of large investors, study the information about the project and, most importantly, do not rush.
Stay up to date with all the latest news. The cryptocurrency market is changing infinitely fast. This leads to the fact that in just a day the situation can change radically. In order to have time to withdraw your assets and redistribute capital, regularly study market news on specialized sites, for example, on our blog.

To know what up with the crypto market and keep up to date with all the news, stay with us. In our blog, you will find many more interesting materials that will help you strengthen your knowledge of the cryptocurrency market and successfully develop.