Bitcoin will survive today’s FTX crash, there have been tougher times in the crypto space
- Comparing FTX to Mt. Gox told Chainalysis that the latter had a larger market share during the collapse than FTX.
- The blockchain research firm believes that if Bitcoin survived under Mt. Gox crash, there is no reason for it to fail now.
The collapse of the crypto exchange FTX earlier this month has gripped the entire crypto space with great fear. There have been talks in the cryptosphere that the fall of a giant like FTX could end Bitcoin and the overall crypto space. Moreover, fears have worsened with Celsius Group facing a liquidity crisis and DCG getting into trouble.
With several factors at play, the question on everyone’s mind is will Bitcoin survive this tsunami? To ease some of these investors’ fears, blockchain analytics firm Chainalysis shares an interesting analogy.
This is a similar event and the collapse of the crypto exchange Mt. Gox back in 2014. As the first Bitcoin exchange, Mt. Gox very popular in the early days of the crypto market. After facing a serious hack in 2014, the crypto exchange lost 750K BTC belonging to customers, which was 6 percent of its supply at the time.
Sharing a comparison between the two, Chainalysis noted that Mt. Gox had larger crypto market shares than FTX. Back in 2014, Mt. Gox 46 percent of total market entry compared to FTX’s 13 percent now. In its report, Chainalysis noted:
FTX’s collapse has rocked #crypto market. But this isn’t the first time crypto has faced significant turmoil related to the collapse of an exchange. Mt. Gox was a larger industry player than FTX at the time of the collapse.
That’s good news since Mt. Gox’s collapse did not destroy crypto. However, the trajectories of the businesses are also important, especially when considering the psychological impact of a collapse.
Chainalysis shares additional insights
The blockchain analytics firm stated that Mt. Gox’s market share was declining during the collapse while FTX’s market share was increasing. Chainlaysis explains that while this may appear to be a major blow to industry confidence, the story changes when looking at the $ inflows over time. “Mt. Gox accounted for 10.9% of total service inflows in the 12 months before the collapse, compared to 4.7% for FTX,” it added. It further added:
Mt. Gox became one exchange among many during a period of growth for the category, taking a smaller share of a larger pie. FTX on the other hand took a larger share of a shrinking pie, beating out other exchanges even as its raw tx volume declined.
In another interesting development, a crypto wallet attributed to the BTC-e exchange was further linked to Mt. Gox hack to life on Wednesday, November 23, sending a total of 10,000 Bitcoins worth a staggering $165 million.
The transactions were divided into two parts. In one part of the transaction, a crypto wallet received 3500 bitcoin which forwarded 300 BTC to another destination. further splitting this saw BTC split into multiple wallets that were not linked to any known custodian providers. The rest of the 6,500 Bitcoins have been left behind.
After Mt. Gox episode, Bitcoin has been under selling pressure and is trading at $16,520 as of now. According to Bloomberg analyst, Bitcoin could see another 40 percent price correction from here.
