On Nov. 24, analytics firm Chainalysis made the Mt.Gox comparison as it was not the first time the crypto world has been shaken due to an exchange demise.
Mt.Gox was the first Bitcoin exchange, but it collapsed in February 2014. Crypto survived and thrived, and it will do so again despite all the mainstream media FUD.
The Japan-based exchange was hacked in early 2014, resulting in the loss of around 750K BTC, or 6% of the entire supply at the time.
1/ Big picture: FTX’s collapse has shaken the #crypto market. But this is not the first time crypto has faced significant turmoil related to the collapse of an exchange.
— Chainalysis (@chainalysis) November 23, 2022
Mt.Gox vs. FTX
When comparing the two, it should be noted that Mt.Gox had a larger market share than FTX, with 46% of exchange inflows compared to 13%.
Chainalysis said that objectively, Mt.Gox was a bigger industry player which is good because its collapse didn’t destroy crypto.
One difference is that Mt.Gox’s market share was in decline, whereas FTX’s was increasing. This may mean that the FTX collapse was a bigger psychological blow to confidence.
Furthermore, crypto services were limited to a handful of exchanges back in 2014, whereas it is much more diverse now, with DEXes capturing almost half of all exchange flows in late 2022.
Following the collapse eight years ago, on-chain transaction volume stagnated for around a year but soon returned and doubled pre-Mt.Gox levels. This time around, crypto investors have been moving assets off exchanges to self-custody.
“This comparison should give the industry optimism. Mt. Gox was a bigger part of the crypto ecosystem when it collapsed in 2014 compared to FTX now, and while the market impact was bad, it rebounded relatively quickly.”
Another factor was that SBF was considered one of the leading faces of crypto. But as traders and investors have painfully learned, putting all faith in a centralized system run by one person could turn out to be a really bad idea.
Furthermore, crypto has been diluted with lending and leverage, which compounds the house of cards effect if the collateral is questionable, which it was with FTX.
Chainalysis concluded that the crypto industry has survived worse than the fall of FTX, so there is “no reason it can’t bounce back from this, stronger than ever.”
Crypto Market Outlook
Since its bear cycle low earlier this week, total market capitalization has recovered by $44 billion. Markets are up 3% on the day, and the total cap is now $865 billion, however, this is still in deep bear territory.
Bitcoin prices had gained 2.3% to reach $16,564, and Ethereum was up 4.6%, trading at $1,184 at the time of writing.
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This article has been originally published at: https://cryptopotato.com/crypto-survived-mtgox-and-it-will-survive-ftx-chainalysis/