How Does FTX Crash Benefit Bitcoin?
Bitcoin has been around for more than a decade. During that time, it has been through stock market crashes, bear markets, and even outright bans. Bitcoin is no stranger to any of these scenarios, since it has been through them all in the past, including the recent failure of the FTX...
Bitcoin has been around for more than a decade. During that time, it has been through stock market crashes, bear markets, and even outright bans. Bitcoin is no stranger to any of these scenarios, since it has been through them all in the past, including the recent failure of the FTX cryptocurrency exchange.
The FTX Crash
The following are some examples of populist slogans that have been used against cryptocurrencies: “Regulation and tight control are both necessary in this case! “Why did the organizations that are in charge of regulating the financial sector once again allow this to happen?” As a direct consequence of the failure of FTX, these illustrious doubters have been brought back to life. They are once again placing all of the blame on the cryptocurrency itself rather than on the individuals who use it for their own purposes, which are usually untrue.
The failure of FTX is analogous to previous instances of bear markets that have taken place in the past, such as the bankruptcy of Mt. Gox in 2014. And this is nothing more than a failure of centralization, not of cryptocurrencies in general; this is a failure of centralization. Cryptocurrencies in general are not to blame for this failure. People will have more faith in decentralized systems in general and digital currencies like Bitcoin in particular as a direct result of this incident.
When the FTX crashed, traders of cryptocurrencies took their bitcoins off of regulated exchanges to protect their investments. After reaching a high of 2.29 million bitcoins at the beginning of the month of November, the total number of bitcoins held on all exchanges has since fallen to 2.07 million bitcoins as of the 17th of the month. Exchanges with their headquarters in the United States had the largest net outflows of funds.
How Does It Help Bitcoin?
This event will result in the creation of a new group of bitcoin holders who will keep their cryptocurrency assets in wallets that do not provide custodial services. This new group of bitcoin holders will be referred to as “cold wallet holders.” This, in turn, will cause the number of bitcoins available on exchanges to go down, making them harder to find. Moreover, this will have the effect of driving up the price of bitcoin.
The Bottom Line
This is evidenced by the fact that the number of bitcoin addresses that have a balance that is greater than zero has hit an all-time high of 43.14 million, despite the overall trend toward a declining price. This is a testament to the fact that demand for bitcoin remains strong. On-chain statistics provide concrete proof for this assertion.
On the other hand, the bear market that took place in 2018 led to a significant reduction in the number of non-zero bitcoin addresses. All of this seems to speak to the fact that investors in cryptocurrencies are confident about the further recovery of the value of the first cryptocurrency. This is supported by the fact that all of these things lead to the same conclusion. And those who are against the vault and who are shouting that bitcoin is on its deathbed should understand that it is time to make peace and accept defeat.