Decentral Block Post

Bitcoin (BTC), Ether (ETH) and cryptocurrency-linked stocks like MicroStrategy are seeing a sharp downturn after news broke that FTX announced filing for Chapter 11 bankruptcy and Sam Bankman-Fried stepped down as CEO. 

Crypto-linked stocks decline

MicroStrategy’s stock, led by the outspoken Bitcoin advocate Michael Saylor, is down 32.57% on Nov. 11 over a five-day period. MicroStrategy holds about 130,000 BTC, and therefore, its stock price is heavily correlated with BTC/USD. Meanwhile, the tech-heavy Nasdaq has gained 0.79%.

Mining stocks also saw losses on Nov. 11, with the Hashrate Index’s Crypto Mining Stock Index showing a 0.14% loss at the time of writing. Top miners’ market performance is much lower, with Marathon down 4.95%, Riot down 5.74% and Hive down 16.08%.

Meanwhile, ETH price saw a 22% decrease this past week despite Ether becoming deflationary for the first time since the Merge. Over 8,000 ETH has been burned in the last seven days, bringing the yearly rate to -0.354%.

In addition to the FTX debacle hindering Ether price, a mass amount of futures liquidations caused the price to hit a fo-month low of $1,070 this week.

Bitcoin (BTC) and cryptocurrency may “take years to recover” from the FTX scandal, one industry analyst warns.

In a Twitter thread on Nov. 11, Filbfilb, co-founder of trading suite Decentrader, said that the Terra LUNA debacle was itself still playing out.

Filbfilb: "I've never seen such a debacle"

The crypto industry is experiencing “a clear case of what goes up must come down,” Filbfilb summarizes.

As the fallout from FTX and Alameda Research only begins to become apparent, many industry businesses and associated tokens have been left reduced to a shadow of their former selves.

Amid bankruptcy concerns from those with exposure to FTX and investigations from regulators, the outlook looks bleak for the industry’s reputation.

Bitcoin (BTC) and cryptocurrency may “take years to recover” from the FTX scandal, one industry analyst warns.

In a Twitter thread on Nov. 11, Filbfilb, co-founder of trading suite Decentrader, said that the Terra LUNA debacle was itself still playing out.

Filbfilb: "I've never seen such a debacle"

The crypto industry is experiencing “a clear case of what goes up must come down,” Filbfilb summarizes.

As the fallout from FTX and Alameda Research only begins to become apparent, many industry businesses and associated tokens have been left reduced to a shadow of their former selves.

Amid bankruptcy concerns from those with exposure to FTX and investigations from regulators, the outlook looks bleak for the industry’s reputation.

The annual supply rate of Ether (ETH) slipped below zero for the first time since Ethereum’s transition to proof-of-stake via the Merge in September. The reason? A spike in on-chain activity amid a massive cryptocurrency market crash. 

Ether turns deflationary for real

As of Nov. 9, more Ether tokens are being burned than created as a part of Ethereum’s fee-burning mechanism. Simply put, the more on-chain transactions, the more ETH transaction fees get burned. 

On a 30-day timeframe, the Ethereum network has been burning ETH at an annual rate of 773,000 tokens against the issuance of 603,000 tokens. In other words, ETH’s supply is going down by 0.14% per year.

Overall, the Ethereum network has burned 2.72 million ETH since the fee-burning mechanism was introduced in August 2021. That amounts to the permanent destruction of nearly 4 ETH per minute.

Ethereum’s transaction fees spiked to their highest levels since May 2022 due to traders rushing to transfer their ETH to and from exchanges amid the dramatic collapse of FTX. 

Ether (ETH) price shed roughly 33% between Nov. 7 and Nov. 9 after an impressive $260 million in future contracts longs (buyers) were liquidated. Traders using leverage were surprised as the price swing caused the largest impact since Aug. 18 at derivatives exchanges.

The $1,070 price level traded on Nov. 9 was the lowest since July 14, marking a 44% correction in three months. This adverse price move was attributed to the FTX exchange’s insolvency on Nov. 8 after clients' withdrawals were halted.

It is worth highlighting that a 10.3% pump in 1 hour happened on Nov. 8, immediately preceding the sharp correction. The price action mimicked Bitcoin’s (BTC) movements, as the leading cryptocurrency faced a quick jump to $20,700 but later dropped toward $17,000 in a 3-hour window.

The previously vice-leader in futures open interest shared a disguised and toxic relationship with Alameda Research, a hedge fund and trading firm also controlled by Sam Bankman-Fried.

Multiple questions arise from FTX and Alameda Research’s insolvency, directed to regulation and contagion. For example, the United States Commodity Futures Trading Commission (CFTC) commissioner Kristin Johnson said on Nov. 9 that the recent case demonstrates that the sector needs more oversight. Moreover, Paolo Ardoino, chief technology officer of the Tether (USDT) stablecoin, tried to extinguish rumors of exposure to FTX and Alameda Research by posting on Twitter.