The collapse of FTX and about 130 of its connected firms are said to have caused crypto traders to become cautious and limited liquidity throughout the crypto markets.
The decline in liquidity, which has occurred as a result of traders reducing bids and offers in order to manage risks, is expected to last at least in the short term, according to Bloomberg.
According to the report, this means that crypto users will have a more difficult time trying to buy or sell their assets, resulting in a more volatile market overall.
According to one metric, market liquidity is at its lowest since early June, according to the research. At the same time, several significant crypto market makers remain active, and trading activity has even increased. Furthermore, the overall volume of major decentralized exchanges has increased by 45% in the last 30 days.
The aftermath from FTX might have some advantages, since market participants may adjust how they trade, lend, and borrow. Furthermore, decentralized exchanges and cold storage wallets may continue to gain popularity.
FTX is far from the first cryptocurrency exchange to fail, and the Web3 business is notorious for its instability, but its failure has been especially shocking given its image as a presumably stable operator in a still-developing field.
