The “bankruptcy” of the FTX cryptocurrency exchange caused billionaire losses in the cryptocurrency market in 2022. However, the failure of the platform was not the worst evil that the cryptomarket has experienced this year. According to a recent report by on-chain data analytics firm Chainalysis, the collapse of the Earth ecosystem (LUNA) in May, followed by the meltdowns of Celsius and Three Arrows Capital (3AC) caused even more losses than the case of FTX.
FTX was not the worst that the cryptomarket experienced in 2022
In the report, Chainalysis analysts consider that the failure of FTX was due to the lack of transparency and “irresponsible, centralized and controlled power”. As a consequence of this, there has been a significant drop in cryptocurrency prices. At the same time, there has been a decline in investor confidence in crypto exchanges in general. But when analyzing the on-chain data, Chainalysis found that while the FTX crash dealt a heavy blow to the market, other cases were even worse. To reach this conclusion, the analysts measured realized gains and losses for a set of personal portfolios over a given period of time. More precisely, they measured the value of each portfolio’s assets at the time they were acquired and subtracted the value of any portion of those assets sent to another portfolio. In addition, they accounted for price differences at different times when the assets were acquired. “We cannot assume that any cryptocurrency sent from a given wallet will necessarily settle. So think of these numbers as an upper bound on realized gains for a given portfolio. This methodology can therefore give us a directional sense of when investors lock in gains and losses,” they said. After applying this methodology, the analysts arrived at the chart below. The weeks in which important events that moved the market took place are highlighted. In addition, Chainalysis scored the types of assets that generated gains or losses each week.
Source: Chainalysis
Terra (LUNA) was worse than FTX
As you can see in the chart, the data suggests that the FTX demise was not the biggest problem for investors this year. “Both the devaluation of Terra’s UST token and the collapse a few weeks later of Celsius and Three Arrows Capital (3AC) generated much larger losses for investors,” reads the analysis. In the case of UST, it is estimated that losses were US$ 20.5 billion (R$ 109 billion). In the case of Celsius and 3AC, the losses were US$ 33 billion (R$ 175 billion). Meanwhile, FTX generated losses estimated at “only” US$ 9 billion (R$ 47 billion). Analysts ponder, however, that the graphs do not take everything into account. For example, people who used FTX probably lost all the funds they had on the exchange. In addition, it is not known whether it will be possible to recover these funds. But from a market-wide perspective, the data suggests that the most impactful crypto events of 2022 had already occurred by the time the FTX debacle hit.
