Cryptocurrency

LUNA dwarves FTX in terms of losses but the worst is yet to come

The aftermath of the FTX bankruptcy has already shaken the crypto industry to its core. After days of speculation about the state of FTX’s balance sheet, the exchange yielded, conceded defeat, and announced that it was in the process of being acquired by Binance.

Tensions generated by speculation made markets tense and devastating when the news broke. With nearly every token in the red, many began comparing this crash to the fallout after Luna’s crash that he saw in June.

However, the comparison tends to be rather subjective. Data analyzed by CryptoSlate showed that Luna’s fallout losses are smaller than the current market downturn caused by FTX.

That’s not to say the losses aren’t starting to grow.

Realized Loss is a metric used to indicate the total loss of all coins moved. The metric shows coins whose last move price was higher than the current move price. From November 4th to November 7th, realized losses skyrocketed, ranging from He’s $50 million to He’s $100 million.

Spikes correlate with increased market tension. As speculation began to mount over the liquidity of FTX and Alameda, the market began preparing for a liquidation.

Three days of sporadic liquidation culminated on Nov. 7 when the market finally surrendered. On November 7th, the market saw him post a realized loss of $760 million and continued to surge around $50 million through November 9th.

Bitcoin realized loss ftx
A chart showing Bitcoin’s realized losses from November 3rd to November 9th (Source: Glassnode)

Realized losses after the Luna collapse in June show that the market has become more volatile. At that time, Bitcoin fell to his two-year low of $17,600, causing billions of dollars worth of realized losses. These realized losses caused a ripple effect, leading to the bankruptcies of some of the biggest players in the industry, including Celsius, BlockFi, Voyager and Three Arrows Capital.

BTC Realized Loss 2022
Chart showing realized losses for Bitcoin in June and July 2022 (source: glass node)

In June, the market saw over 1 billion liquidations per day. A total of 500 million liquidations have occurred due to the FTX collapse since November 4th. A year-to-date graph of realized losses puts the impact of FTX into perspective and highlights the seriousness of Luna’s collapse.

A graph showing Bitcoin’s realized losses in 2022 (Source: Glassnode)

Luna’s collapse was unprecedented and unique, but the market is still in the early stages of FTX’s impact. It may be weeks before the true extent of the crisis is felt.

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