- In November 2022, CoinDesk revealed Alameda Research’s asset holdings, triggering the collapse of the FTX exchange.
- The aftermath of the FTX collapse was felt beyond the exchange. Companies such as Crypto.com downsized, and Celsius faced legal challenges.
- Despite the market downturn, some cryptocurrencies such as Solana, Chainlink, and OKB showed resilience and recovery.
The popular exchange, FTX, collapsed in November 2022 and happened over 10 days. The catalyst for the downfall of FTX was a cryptocurrency news site called CoinDesk that revealed a majority of digital assets being held by a quantitative trading company and the sister company run by Bankman-Fried, Alameda Research. Scores of customers and investors withdrew their funds from the leading exchange and made the company bankrupt and insolvent.
This article will briefly discuss the causes and consequences of the FTX crash and how the three Altcoins: Solana, Chainlink, and FTX, survived and recovered.
Flashback to the FTX Crash
The sudden demise of the crypto exchange in 2022, FTX, damaged the crypto industry with cascading effects, spreading widespread mistrust among top crypto services and the public that operated with FTX exchange.
Before the FTX crash, it was the third-largest cryptocurrency exchange, and the fallout reverberated for several years across courts, regulators, and investors who are still trying to regain their lost funds and prevent the catastrophic event from happening again. Several bankruptcy filings ensured FTX had liabilities and assets, each ranging between $10 billion to $50 billion.
The increase in customer withdrawals, owing to the concerns of questionable valuation practice and the unusually close-knit relationship with Alameda, pushed Alameda and FTX into bankruptcy and disrupted the highly volatile cryptocurrency market that lost billions of dollars, falling below evaluation of $1 trillion. This collapse has been recorded as the largest hit in the history of crypto exchanges, where FTX deterred cautious crypto investors from continuing their activities in the market.
Crypto market journey after the crash
Several cryptocurrency exchanges, such as Crypto.com, were compelled to downsize due to increased customer withdrawals after the collapse of FTX. Crypto lenders and financial institutions, such as Celsius, Genesis Global, and BlockFi, are still undergoing legal proceedings and bankruptcy liquidations for authorizing massive undercollateralized loans to Alameda Research and FTX and neglecting the risk profile on loan repayments.
Regulators have also demanded greater government interference over crypto usage in the digital space. Both domestic and international law enforcement have tightened their process of scrutiny over crypto and limited exposure to the traditional market. While customers and investors may not be fully recovered from their lost assets, certain measures have been taken to recoup the money lost due to the bankruptcy.
Some measures taken to recover the lost funds include asking notable politicians to return their political donations, suing for digital assets that people received as gifts from their sons, and tracing where the crypto went.
The 3 winners
The Solana cryptocurrency lauded by Sam Bankman-Fried, the founder of FTX, was hit harder than any other cryptocurrencies by the exchange’s collapse. The token had dropped by more than 53.8%, along with other major cryptocurrencies in the market.
However, even after the major fallout, the Solana price recovered as it removed itself from the shadow of Alameda Research. Solana plunged below $13 on 9 November following a report published by CoinDesk that Alameda Research held a huge amount of it.
Several applications on Solana lost more than $700 million. However, in 2023, more businesses and people started to adopt and use Solana for non-fungible tokens, decentralized applications, and other such purposes, increasing the demand and price of SOL tokens.
At the time of writing, Solana was trading at $55.82 (more than 350% yearly increase) with an overall positive market sentiment, increased adoption and usage, and favorable regulatory developments that boosted investor confidence and increased the demand for SOL tokens.
Chainlink had fallen by as much as 40% after the FTX collapse, but it was still relatively less exposed to the cryptocurrency exchange compared to other major digital currencies. Moreover, the development updates on the Chainlink protocol resulted in a sharp recovery ever since the crash. Notably, purchasing LINK in 2022 for $5.68 would produce more than 150% of profits in 2023.
Different factors helped the Chainlink price rally, including the growing adoption rate, increasing demand among retail and institutional investors, and the launch of a new proof of reserve product.
According to our LINK price prediction, Chainlink is expected to be trading at $12.38 on average, with a yearly high and yearly low of $10.15 and $14.61, respectively. Additionally, garnering the benefits of the blockchain network, Chainlink has a bright future, offering investors an opportunity to benefit from a global chain of computers that provides reliable data from the real world to smart contracts.
According to Changelly’s price prediction, Chainlink is expected to be around $14.80 on average, with a minimum and maximum price of $12.33 and $13.57, respectively. The CoinCodex forecasts suggest a yearly low and yearly high of $14.36 and $87.38 for Chainlink in 2024.
OKB, OKX exchange’s native token, was also one of the least-affected cryptocurrencies during the FTX collapse. It has considerably benefited in price after the crypto exchange went bust. Price gains on OKB were essentially the losses made on Binance, whose token has been underperforming in the crypto market since the exchange is undergoing legal pressure in the US.
Purchasing OKB tokens at $17.20 during the FTX Crash a year ago would have brought investors a profit of 227% today. The remarkable rise of OKB even after the FTX collapse highlights the token’s potential and stability to capitalize even on the misfortune of its rivals.
In conclusion, while the overall crypto demand fell after the massive FTX scandal, three notable cryptocurrencies, including Solana, Chainlink, and OKB, emerged winners by recovering and breaking headlines with their immense potential. Although investors have been skeptical about the stability of crypto, its increased scams, and security, the three currencies have emerged as some of the best investment channels for investors in 2023 and beyond.
The broader consequences of the FTX crash on the crypto market are still unknown. Still, blockchain development, price rallies, increasing demand, and growing adoption are some factors that have driven history and cryptocurrencies to their all-time high in 2023.