Blockchain Analysis Firm Chainalysis Says That The Crypto Industry Has Made It Through Events Worse Than FTX Demise

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Last Updated on November 24, 2022 by Bitfinsider

Chainalysis, a blockchain analysis company, compared FTX bankruptcy to the collapse of Mt. Gox to assess how it will affect the ecosystem.

It came to the conclusion that FTX represented a relatively lesser portion of the cryptocurrency market than Mt. Gox did at the time and that the market would recover more powerfully than ever.

Eric Jardine, research lead at Chainalysis, first compared the market shares of the two companies in a thread on Twitter on November 23. He discovered that Mt. Gox averaged 46% of all exchange inflows in the year before its 2014 collapse, compared to FTX’s average of 13%, which ran from 2019 to 2022.

When Mt. Gox failed in 2014, centralized exchanges (CEXes) were the only players in the market, according to Jardine. By late 2022, however, Decentralized Exchanges (DEXes), such Uniswap and Curve, had seized roughly half of all exchange inflows.

However, Jardine points out that while Mt. Gox’s market share was steadily declining, FTX’s was slowly increasing, and that business trajectories are important to take into account, adding: “Mt. Gox was becoming one exchange among many during a period of growth for the category, taking a smaller share of a bigger pie. FTX on the other hand was taking a bigger share of a shrinking pie, beating out other exchanges even as its raw tx volume declined.”

Despite this, Jardine determined that Mt. Gox was a more significant component of the crypto ecosystem at the time of its collapse than FTX because it was a “linchpin of the CEX category at a time when CEXes dominated.”

The recovery of the cryptocurrency market following the collapse of Mt. Gox is then examined by Jardine, who discovered that although activity quickly resumed after a year or so of stagnation in on-chain transaction volume.

After losing 850,000 Bitcoin in a hack in February 2014, Mt. Gox stopped trading, shut down its website, and requested bankruptcy protection.

Customers who deposited holdings on the exchange have still not received their money back, however the Mt. Gox Trustee declared on October 6 that creditors had until January 10, 2023 to choose a form of payment for the allegedly held 150,000 BTC.

The comparison, in Jardine’s opinion, “should give the industry optimism,” as when it comes down to market fundamentals, “there’s no reason to think the industry can’t bounce back from this, stronger than ever,” despite the existence of other factors such as Sam Bankman-Fried’s prominent public profile.

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