Monday, June 24, 2024

Realized losses from FTX collapse peaked at $9B, far beneath earlier crises

by Jeremy

Blockchain analytics agency Chainalysis has tried to place the FTX collapse into perspective — evaluating peak weekly-realized losses within the wake of the alternate’s collapse in comparison with earlier main crypto collapses in 2022.

The Dec. 14 report discovered the depegging of Terra USD (UST) in Might noticed weekly-realized losses peak at $20.5 billion, whereas the subsequent collapse of Three Arrows Capital and Celsius in June noticed weekly-realized losses peak at $33 billion. 

Compared, weekly realized losses throughout the FTX saga peaked at $9 billion within the week beginning Nov. 7, and have been lowering weekly since. 

Chainalysis stated the info means that by the point the FTX debacle passed off in November, traders have already been hit with the “heaviest” crypto occasions this yr.

“The information […] means that as of now, the heaviest hitting [crypto] occasions had been already behind traders by the point the FTX debacle passed off.”

The analytics agency calculated whole realized losses by taking a look at private wallets and measuring the worth of property as they had been acquired and subtracting the worth of those property on the time they had been despatched elsewhere.

Nonetheless, the info should have overestimated realized losses, because it counted any motion from one pockets to a different as a sale occasion. Chainalysis aalso famous that the chart doesn’t take different statistics under consideration, similar to consumer funds saved on FTX’s alternate that are frozen.

“We will’t assume that any cryptocurrency despatched from a given pockets is essentially going to be liquidated, so consider these numbers as an higher certain for realized positive factors of a given pockets,” it defined.

Associated: Was the autumn of FTX actually crypto’s ‘Lehman second?’

Whereas Chainalysis’ knowledge covers realized losses, on-chain analytics platform CryptoQuant not too long ago shared knowledge on how web unrealized losses for Bitcoin (BTC) was impacted following the FTX collapse. 

It discovered that unrealized losses for BTC maxed at -31.7% following the FTX collapse in comparison with the collapse of 3AC/Celsius and Terra Luna, which solely peaked at -19.4%.

Internet unrealized revenue/loss for Bitcoin. Supply CryptoQuant.

Analytics knowledge agency Glassnode additionally highlighted the excessive degree of unrealized losses following the FTX collapse in a Nov. 17 tweet, evaluating it to the height of -36% seen throughout the 2018 bear market.

The positive factors or losses related to an funding are thought of unrealized up till the purpose that the funding is offered. The act of promoting “realizes” these losses or positive factors. Unrealizes losses are also referred to as paper losses.