The fall of the FTX empire has left a gigantic void in Crypto Market. The gap is so large that the drop in liquidity over the past week is more significant than in any previous market drawdown.

Many lost their savings in the crash. FTX alone lost 2 Billion dollars that belonged to its customers!

Amid the FTX crisis, the market underwent a dramatic shift. Bitcoin hit a two-year low, and the total market capitalization of cryptocurrencies dropped as low as $786 billion.

The fall of the FTX empire has left a gigantic void in Crypto Market. The gap is so large that the drop in liquidity over the past week is more significant than in any previous market drawdown.

Many lost their savings in the crash. FTX alone lost 2 Billion dollars that belonged to its customers!

Users also lost money in the crypto slump that followed. The market witnessed the largest long-liquidation event since the Luna crash on Nov 10. Over 196 million dollars got liquidated in the event! Pessimism took over the market, and short traders leveraged the opportunity. Subsequently, the funding rate went negative. And Bitcoin reached the highest negative funding rate in 2022! 

Funding rates are periodic payments between traders to make the perpetual futures contract price close to the spot price. Even though the funding rate impacts the price of a coin, its influence differs in various market conditions.

So correlating high funding rates with inevitable price drops is a wrong interpretation. But as a market sentiment tool, the Funding Rate is quite handy.

When the market is bullish, and long traders dominate the short traders, the Funding Rate goes above 0. So a positive funding rate implies that many traders are bullish.

Short traders become dominant when the market is bearish, and the funding rates turn negative. That makes it a fantastic buying opportunity. 

In July 2016, the funding rate peaked (negative) and that signaled a cycle reset. Prices rallied after that point from $500 to $18k. 

In March 2020, the funding rate peaked again, and after the reset, the market flew high. Now, the funding rate is again turning negative, and that indicates DCA opportunities.

Always remember, a high negative funding rate does not indicate a market bottom, but the near bottom territories. If someone keeps waiting for the prices to fall, the person will keep on waiting. Patience pays off only when you are patient enough to act.

Several regulators have opened investigations into the collapse amidst all the rumors about SBF's whereabouts and FTX filing for Chapter 11 bankruptcy. The California Department of Financial Protection and Innovation (DFPI) declared that it is already investigating FTX. FTX will also face US Justice Department Probe along with SEC, DOJ, and many other state and federal investigations.

The whole FTX situation is sketchy at best. There are reports that FTX executives had known the exchange was using customer funds. FTX also got hacked on Nov 12, for an amount exceeding $600M. 

Bankman-Fried has not only cheated his customers but his employees as well. According to reports, he sold FTX equity to employees at a 50% discount in spring.

There was also drama in the Bahamas with FTX and SCB. The Securities Commission of the Bahamas (SCB) froze FTX's assets in the Bahamas late Thursday. The exchange had already halted withdrawals a few days before.

Last week, FTX announced that at the request of the regulators, it had permitted users with addresses in the Bahamas to withdraw funds. Then, SCB published a statement on Twitter Saturday suggesting that the news was inaccurate.

Several users outside the Bahamas tried to withdraw funds with the help of local users.

The Bahamas-based users sold the foreign users high-valued NFTs, presumably with the understanding that they would be permitted to retain a portion of the locked-up cash.

The positive outlook of the FTX chaos is that the overall market size remained above the 2020 level. But the negative aspect is that the market depth of many cryptos fell significantly.

According to Kaiko, the market depth for bitcoin (BTC) on Kraken has decreased by 57%, Bitstamp's by 32%, Binance's by 25%, and Coinbase's by 18%.

The market depth of coins that have ties with FTX plunged even more deeply. Across all order books, SOL's overall market depth has decreased by 50%, from 1 million SOL to under 500,000 SOL.

The liquidity will remain relatively dry until the market begins to pick up and market confidence gets restored. While crypto tried to rebound from the FTX bankruptcy, the US stocks fell after the biggest weekly gain since June.

These were the US indexes as the market began on Monday,

• S&P 500: 3,978.29, down 0.37%

• Dow Jones Industrial Average: 33,736.81, down 0.03% (11.05 points)

• Nasdaq Composite: 11,227.48, down 0.85%

The FTX collapse has heightened distrust for CEXs, and many investors have moved their assets to decentralized wallets.

On-chain data for Exchange Reserves and Exchange Netflow reveal that users moved more than 80,000 BTC out of CEX wallets within a day.

Currently, centralized exchange reserves are approximately 2.089 million Bitcoin and 19.999 million Ether, the lowest amount since November 2018.

Exchange outflows typically indicate that BTC is HODLed for the long term, which is bullish. This instance, though, seems to be the outcome of waning trust in centralized crypto exchanges.

That said, the move to hold BTC in an individual cryptocurrency wallet without selling it on the exchange is remarkable.

Following the outflow, popular custodial wallet tokens had an impressive rally.

The average ROI was above 22% last week for different non-custodial wallet tokens, including Trust wallet tokens, Atomic wallet coins, Block wallet tokens, math wallet tokens, etc.

The Atomic wallet has rallied to a closing of 54%, while Block Wallet has already increased by 97% in just 24 hours. And Trust wallet token (TWT) is up 110% this week.

Following strange on-chain behavior between itself and Gate, a rival exchange, some are now concerned that CryptoCom may be experiencing liquidity issues.

The CEX accidentally gave $400 million worth of ETH to the Gate on Oct 21 this year.

There are also concerns regarding the token reserves of crypto com. Almost 20% of the CEX's token allocation is in the dog-inspired meme token, SHIB.

Without SBF and FTX donations, political funding for cryptocurrencies is at risk of ceasing. SBF was one of the biggest political donors in the US.

FTX and SBF donated more than $70M to political campaigns in the 2021 US election cycle. SBF himself spent close to $40M.

And without its greatest supporter, the landscape of pro-crypto candidates in the US will soon shift. The downfall of SBF's crypto business empire will be detrimental to the crypto funding scene.

Miners' Position Index or MPI hits a warning again. MPI is the ratio of total miner outflow to the 1-year MA of total miner outflow.

Higher values of MPI indicate miners are sending unusually high amounts of coins. It suggests possible sell-offs, and the price would subsequently drop. It is the fourth time MPI has hit a warning in 2022.

Bitcoin addresses holding at least 1 BTC reached an all-time high. There are currently 921,578 wallets with more than 1 BTC.

The whole FTX fiasco has given the regulators the necessary ammunition to come done on the industry hard. The hammer of regulators is mere inches away!

The fall of the FTX empire has left a gigantic void in Crypto Market. The gap is so large that the drop in liquidity over the past week is more significant than in any previous market drawdown.

Many lost their savings in the crash. FTX alone lost 2 Billion dollars that belonged to its customers!

Amid the FTX crisis, the market underwent a dramatic shift. Bitcoin hit a two-year low, and the total market capitalization of cryptocurrencies dropped as low as $786 billion.

The fall of the FTX empire has left a gigantic void in Crypto Market. The gap is so large that the drop in liquidity over the past week is more significant than in any previous market drawdown.

Many lost their savings in the crash. FTX alone lost 2 Billion dollars that belonged to its customers!

Users also lost money in the crypto slump that followed. The market witnessed the largest long-liquidation event since the Luna crash on Nov 10. Over 196 million dollars got liquidated in the event! Pessimism took over the market, and short traders leveraged the opportunity. Subsequently, the funding rate went negative. And Bitcoin reached the highest negative funding rate in 2022! 

Funding rates are periodic payments between traders to make the perpetual futures contract price close to the spot price. Even though the funding rate impacts the price of a coin, its influence differs in various market conditions.

So correlating high funding rates with inevitable price drops is a wrong interpretation. But as a market sentiment tool, the Funding Rate is quite handy.

When the market is bullish, and long traders dominate the short traders, the Funding Rate goes above 0. So a positive funding rate implies that many traders are bullish.

Short traders become dominant when the market is bearish, and the funding rates turn negative. That makes it a fantastic buying opportunity. 

In July 2016, the funding rate peaked (negative) and that signaled a cycle reset. Prices rallied after that point from $500 to $18k. 

In March 2020, the funding rate peaked again, and after the reset, the market flew high. Now, the funding rate is again turning negative, and that indicates DCA opportunities.

Always remember, a high negative funding rate does not indicate a market bottom, but the near bottom territories. If someone keeps waiting for the prices to fall, the person will keep on waiting. Patience pays off only when you are patient enough to act.

Several regulators have opened investigations into the collapse amidst all the rumors about SBF's whereabouts and FTX filing for Chapter 11 bankruptcy. The California Department of Financial Protection and Innovation (DFPI) declared that it is already investigating FTX. FTX will also face US Justice Department Probe along with SEC, DOJ, and many other state and federal investigations.

The whole FTX situation is sketchy at best. There are reports that FTX executives had known the exchange was using customer funds. FTX also got hacked on Nov 12, for an amount exceeding $600M. 

Bankman-Fried has not only cheated his customers but his employees as well. According to reports, he sold FTX equity to employees at a 50% discount in spring.

There was also drama in the Bahamas with FTX and SCB. The Securities Commission of the Bahamas (SCB) froze FTX's assets in the Bahamas late Thursday. The exchange had already halted withdrawals a few days before.

Last week, FTX announced that at the request of the regulators, it had permitted users with addresses in the Bahamas to withdraw funds. Then, SCB published a statement on Twitter Saturday suggesting that the news was inaccurate.

Several users outside the Bahamas tried to withdraw funds with the help of local users.

The Bahamas-based users sold the foreign users high-valued NFTs, presumably with the understanding that they would be permitted to retain a portion of the locked-up cash.

The positive outlook of the FTX chaos is that the overall market size remained above the 2020 level. But the negative aspect is that the market depth of many cryptos fell significantly.

According to Kaiko, the market depth for bitcoin (BTC) on Kraken has decreased by 57%, Bitstamp's by 32%, Binance's by 25%, and Coinbase's by 18%.

The market depth of coins that have ties with FTX plunged even more deeply. Across all order books, SOL's overall market depth has decreased by 50%, from 1 million SOL to under 500,000 SOL.

The liquidity will remain relatively dry until the market begins to pick up and market confidence gets restored. While crypto tried to rebound from the FTX bankruptcy, the US stocks fell after the biggest weekly gain since June.

These were the US indexes as the market began on Monday,

• S&P 500: 3,978.29, down 0.37%

• Dow Jones Industrial Average: 33,736.81, down 0.03% (11.05 points)

• Nasdaq Composite: 11,227.48, down 0.85%

The FTX collapse has heightened distrust for CEXs, and many investors have moved their assets to decentralized wallets.

On-chain data for Exchange Reserves and Exchange Netflow reveal that users moved more than 80,000 BTC out of CEX wallets within a day.

Currently, centralized exchange reserves are approximately 2.089 million Bitcoin and 19.999 million Ether, the lowest amount since November 2018.

Exchange outflows typically indicate that BTC is HODLed for the long term, which is bullish. This instance, though, seems to be the outcome of waning trust in centralized crypto exchanges.

That said, the move to hold BTC in an individual cryptocurrency wallet without selling it on the exchange is remarkable.

Following the outflow, popular custodial wallet tokens had an impressive rally.

The average ROI was above 22% last week for different non-custodial wallet tokens, including Trust wallet tokens, Atomic wallet coins, Block wallet tokens, math wallet tokens, etc.

The Atomic wallet has rallied to a closing of 54%, while Block Wallet has already increased by 97% in just 24 hours. And Trust wallet token (TWT) is up 110% this week.

Following strange on-chain behavior between itself and Gate, a rival exchange, some are now concerned that CryptoCom may be experiencing liquidity issues.

The CEX accidentally gave $400 million worth of ETH to the Gate on Oct 21 this year.

There are also concerns regarding the token reserves of crypto com. Almost 20% of the CEX's token allocation is in the dog-inspired meme token, SHIB.

Without SBF and FTX donations, political funding for cryptocurrencies is at risk of ceasing. SBF was one of the biggest political donors in the US.

FTX and SBF donated more than $70M to political campaigns in the 2021 US election cycle. SBF himself spent close to $40M.

And without its greatest supporter, the landscape of pro-crypto candidates in the US will soon shift. The downfall of SBF's crypto business empire will be detrimental to the crypto funding scene.

Miners' Position Index or MPI hits a warning again. MPI is the ratio of total miner outflow to the 1-year MA of total miner outflow.

Higher values of MPI indicate miners are sending unusually high amounts of coins. It suggests possible sell-offs, and the price would subsequently drop. It is the fourth time MPI has hit a warning in 2022.

Bitcoin addresses holding at least 1 BTC reached an all-time high. There are currently 921,578 wallets with more than 1 BTC.

The whole FTX fiasco has given the regulators the necessary ammunition to come done on the industry hard. The hammer of regulators is mere inches away!