There were nearly 5 million people affected by the FTX implosion, and many crypto firms exposed to it also suffered. Crypto market broker Cumberland has tweeted that the industry is recovering. According to the firm, “dozens of crypto companies are either severely curtailed or out of business, and the industry’s future is as cloudy as ever.”
The market has been forced back to a low liquidity and volatility regime, which signals it will be difficult to establish a lasting positive move. Coinciding with this, Glassnode, a crypto analytics firm, reported “depressing” futures volumes for Bitcoin and Ether, with trading activity returning to levels seen before 2021 when Bitcoin’s price first topped $20,000.
The Bitcoin and Ether futures open interest has also dropped significantly toward mid-2022 levels. For Bitcoin and Ether, the leverage ratio indicator (which monitors the ratio between open interest volume) is now at 2.5% and 3.1%, respectively.
The number of spot trades in bitcoin on cryptocurrency exchanges has also dropped dramatically, approaching lows not seen before 2020. According to data compiled by Blockchain.com, the seven-day moving average of exchange trade volume has fallen to $67 million from a peak of $1.4 billion during the 2021 bull market.
As low liquidity and market uncertainty persist, it is possible that the bear market is far from over. In addition, Bitcoin’s realized volatility is nearing two-year lows, down 22% in a week and 28% in two weeks. It is possible that prices will continue to trend sideways or slowly lower in the future, with nothing in the way of volatility. Consequently, analysts also anticipate a short-term bear market rally.
Crypto analyst Daan Crypto Trades expects “choppy price action” as he claims that the flagship cryptocurrency has entered a broader price range. The analyst tweeted:
A similar sentiment was echoed by another crypto analyst named Moustache, who pointed out that bitcoin could drop as low as $14,600. However, the analyst noted that this should be perceived as an opportunity to buy bitcoin at a discount. Moustache tweeted: