The decline of the crypto exchange FTX overturned a progressive positive situation in the digital asset ecosystem following the huge deleveraging in May as well as June 2022. The American crypto exchange Coinbase mentioned in its research report on Tuesday that the digital asset world has gone through a substantial downfall due to the FTX crash during a positive reemergence of the market.
New Report from Coinbase Points toward a Lengthened Crypto Winter after FTX Fall
The latest turmoil in the crypto space as well as the deficiency in the big purchasers have made this field more vulnerable by prolonging the already lengthy bear market, as noted by analysts Brian Cubellis and David Duong. The bankruptcy proceedings of FTX will be keenly observed however the sector is even now reliant on the interest rates across the United States, as per the report.
The market would most likely witness a second-order impact caused by the fallout of FTX. This influence will take into account the counterparties which have interacted or lent funds to the exchange or even its sister organization called Alameda Research along with the possible consequences. As put by Coinbase, inadequate liquidity could not endure much longer and will end by the denouement of 2022.
Nonetheless, the report added, the dominance of stablecoins has elevated to almost eighteen percent of the whole market capitalization of the crypto sector that has plummeted from $1T (witnessed at October’s end) to approximately $800B as of the 12th of November. Stablecoin is a form of crypto having its value pegged to other assets, including gold or the US dollar.
Crypto Winter Could Likely Consume the Next Year, Says Coinbase
Because of the mutual effect of the growing hashrate (increasing the difficulty level consequently), escalating energy charges, as well as the lower prices of Bitcoin, a more pressurized financial situation is being faced by BTC miners. Hashrate counts as a measure of computing energy specified for Bitcoin mining. With the increase witnessed in the hashrate, an escalation also occurs in the difficulty with which the crypto is produced.
The breakdown of FTX has caused huge damage to the belief of the investors in the crypto space. Thus, the phase of remediation would potentially require some time and the crypto winter would as a result get extended by a few additional months, probably through the upcoming year’s end, the report suggested.