How Are Crypto Traders Behaving After FTX Collapse?

According to the data from CIO FTX was processing nearly $100 billion in trade volumes every month at its peak. So how are crypto traders behaving after the demise of the crypto exchange? Well, let's find out joining us now to discuss is Kao Director of Research Clara Mali. Welcome back. Thank you. So you point out that FTX never captured more than single digits of market share. I don't know that's a that's not a lot is it but yet $100 billion in trade volume every month, how come only single digits? Yeah. So Binance, I mean has been globally dominant for many years now. So Binance, when FTX was still around, still had around 40 to 50% of global trade volumes. So I think in context, we're comparing it to Binance, which is a bit hard. Um FTX still had massive trade volumes. You saw nearly $100 billion every single month, but this was ultimately on par with exchanges like OK X and also coin base. Um So even though FTX never did become the global leader, I would say their marketing budget was enormous and at times, it almost felt like FTX had a stronger name brand than Binance, even if they never actually claimed that much volume relative to that exchange. So you, you also note that the uh crypto market is uh is still feeling the after effects from, from the collapse of, of, of FTX. Uh A A and as we just discussed in the previous segment since FTX uh collapsed and, and you have all these questions, we, we're seeing fi five M five year, if not a whole decade lows in in crypto trading and particularly in Bitcoin. What's going on here? Yeah. So in the aftermath of the FTX collapse, this was like in the days that followed Cicco research, we noticed something that we dubbed the Alameda Gap. So the Alameda Gap refers to the absence of liquidity on Cryptocurrency exchanges. And by liquidity, we are defining that as what's happening on the order books. So market depth. So essentially what we saw is market makers en masse essentially pulled out all of their orders from global crypto exchanges, not just FTXFTX had collapsed, but this was across all markets globally. And here we have this very powerful chart that essentially shows the Alameda gap. It shows market depth across all exchanges in Caicos coverage. We have nearly 100 exchanges and here we've aggregated like 30 cryptocurrencies um order books for this one chart. And what we're seeing is that there's less than half market depth post collapse than what there was pre collapse. And over the past year, there has been virtually no change in market depth, meaning that essentially these market makers, they pulled out of the markets and then a lot of them just didn't return. And we already are seeing reports about that, especially in the United States. You have big market makers announcing that they're pulling out of us markets and that they're winding down some of their alt coin trading activities. This is also in response to what we're seeing on the regulatory side. But ultimately, it's all linked to the post FTX landscape. So we're gonna get into this in our next segment. But I do want to hear your view because I know does a lot of kind of global research, you know, FTX was not a US exchange, right? And they had users all over the world. I'm just curious if you guys have looked at sort of like the global distribution of users and the global ramifications of the collapse. Definitely. So I think almost similar to Binance, while FTX was a global exchange and same with how Binance is a global exchange, there are still ways for us users to access these exchanges. And I think that actually came out in the aftermath of the FTX collapse. Sort of all this information about sort of how these trading firms work and how it's actually possible even if you're based in the US, whatever you set up like offshore entities to trade on these exchanges. So I think the US is still like a big, big market for crypto activity, even if like they're not technically trading on these exchanges, they are sort of by these intermediaries. So we're still seeing a lot of impact of this FTX collapse also in the United States, even if it wasn't necessarily in a US based exchange. Yeah, if you look at, if you just, if you look at the chart from the bankruptcy trial, like a lot of the user distribution was like in the Cayman Islands and stuff and I, I assume that's kind of what you may be referring to. Right. Like some of these offshore entities that may or may not have been, you know, us investors. Yes. Exactly.