The State of Crypto Markets After An Extremely Hectic Week

Here’s the on-chain look at what’s happening in crypto markets during one of the wildest weeks in industry history.

FTX, one of the industry’s largest exchanges, appears to be on the brink of collapse. Its native FTT token has plummeted 84%, and other major cryptocurrencies have also seen significant price declines.

The market is in flux, and it would be pointless to try and make short or medium-term predictions right now. But what we can do is use on-chain data to assess how the market is reacting and look for signs of on-going risk. Here’s what we’re seeing.

First, we look at exchange inflows. Centralized exchanges are where users trade and cash out, so in times of volatility, we’d expect to see more funds moving there. But so far, we’ve seen surprisingly little change in inflows given the state of the market.

Next, we look for evidence of investors fleeing the volatility of crypto. They can do this without off-ramping by swapping for stablecoins, or they can do it by cashing out and exchanging their crypto for fiat. Let’s look at both.

Here is the 24hr rolling average of transaction volume by asset type. Indeed, we see a big spike in stablecoin volume on 11/7 when rumors of FTX trouble ramped up. Those investors may be temporarily stabilizing their holdings and can easily swap back into crypto any time.

Kaiko order book data shows a similar but less pronounced increase in crypto-for-USD swaps on roughly the same timeline. Investors cashing out may be intending to sit out of crypto for the long term, or even indefinitely, but the numbers overall don’t indicate mass panic.

There’s no sugarcoating it: The potential collapse of an industry stalwart like FTX is bad for crypto, and the market reflects that. But the industry has survived events like this before and emerged stronger. We know it will again. For now, we’ll keep monitoring for updates.