The collapse of FTX and about 130 of its affiliated entities is reported to have forced crypto traders to become cautious, resulting in low liquidity across the crypto markets.
According to Bloomberg, the reduction in liquidity caused by traders lowering bids and offers to control risks is anticipated to remain at least in the short term.
According to the report, this will make it more difficult for crypto users to buy or sell their assets, resulting in a more volatile market overall.
Market liquidity is at its lowest since early June, according to one gauge, according to the research. At the same time, numerous major crypto market makers are still operational, and trade volume has even grown. Furthermore, in the previous 30 days, the entire volume of major decentralized exchanges has surged by 45%.
Because market players may modify how they trade, lend, and borrow as a result of FTX, the aftermath may have certain positives. Furthermore, decentralized exchanges and cold storage wallets may become popular in the future.
FTX is far from the first cryptocurrency exchange to fail, and the Web3 business is notorious for its instability, but its failure is particularly shocking given its image as a presumably stable operator in a still-developing field.
