How FTX’s Epic Fail Made Bitcoin and Ethereum Look Like Stablecoins
If you thought 2023 was going to be a good year for crypto, think again. The market has been hit by a massive earthquake that shook the foundations of the trillion-dollar industry. And the epicenter of this disaster was none other than FTX, one of the largest and most popular crypto exchanges in the world.
FTX, which was founded by the young billionaire Sam Bankman-Fried, had been enjoying a meteoric rise in popularity and valuation, thanks to its innovative products and services, such as futures, options, leveraged tokens, prediction markets, and NFTs. FTX had also been making headlines for its aggressive marketing campaigns, such as sponsoring sports teams and celebrities, and naming rights deals for stadiums and e-sports arenas.
But all that came crashing down last week, when FTX suffered a catastrophic system failure that resulted in massive losses for its users and investors. According to reports, FTX’s servers were hacked by an unknown group of cybercriminals, who exploited a vulnerability in the exchange’s smart contracts. The hackers managed to drain over $10 billion worth of crypto assets from FTX’s hot wallets, as well as manipulate the prices of various tokens on the platform.
The hack triggered a domino effect that sent shockwaves across the entire crypto market. As FTX’s users panicked and tried to withdraw their funds, they faced long delays and errors due to the exchange’s compromised system. Many users also found out that their accounts had been liquidated or margin called due to the extreme volatility caused by the hack. Some users even reported losing their entire life savings or going into debt because of FTX’s negligence.
As FTX’s reputation and liquidity plummeted, so did its native token, FTT. FTT, which had reached an all-time high of $120 in October 2022, crashed to below $10 in a matter of days, wiping out over 90% of its value. FTT holders were left holding the bag, as they watched their investments evaporate into thin air.
The FTX debacle also had a negative impact on the rest of the crypto market, as investors lost confidence and trust in the industry. Prices of major cryptocurrencies, such as Bitcoin and Ethereum, fell sharply as well, as traders sold their holdings to avoid further losses or hedge their risks. Bitcoin, which had been trading above $30,000 for most of 2022, dropped to below $20,000 for the first time since 2021. Ethereum, which had been challenging Bitcoin’s dominance with its network upgrades and DeFi ecosystem, also fell below $1,000 for the first time since 2020.
The irony of this situation is that Bitcoin and Ethereum actually performed better than most other cryptocurrencies during this crisis. While FTX and other altcoins lost over 80% or more of their value in a week, Bitcoin and Ethereum only lost about 40% or less. This shows that Bitcoin and Ethereum are still the most resilient and reliable cryptocurrencies in the market, despite their flaws and limitations. In fact, some analysts have argued that Bitcoin and Ethereum have become more like stablecoins than volatile assets, as they have maintained a relatively stable range compared to other tokens.
This is not to say that Bitcoin and Ethereum are immune to further shocks or challenges. The crypto market is still recovering from the FTX disaster, and there are many uncertainties and risks ahead. For instance, regulators around the world are increasing their scrutiny and pressure on crypto exchanges and platforms, especially after the FTX fiasco. Moreover, new technologies and innovations are emerging every day that could potentially disrupt or improve the existing crypto infrastructure and ecosystem.
However, one thing is clear: FTX’s epic fail has shown that not all cryptocurrencies are created equal. Some are more secure, stable, and trustworthy than others. And when it comes to crypto investing, it pays to do your research and due diligence before putting your money into any token or platform. Because you never know when the next FTX might happen.
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Spread the loveIf you thought 2023 was going to be a good year for crypto, think again. The market has been hit by a massive earthquake that shook the foundations of the trillion-dollar industry. And the epicenter of this disaster was none other than FTX, one of the largest and most popular crypto exchanges in…