[Bitcoin Now] Aftermath of FTX Incident... Trading Volume Plummets After Panic Selling

Chain Panic Selling Following FTX Incident
Bitcoin Trading Volume Decreases Compared to Previous Month

[Image source=Reuters·Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] After the chain panic selling of Bitcoin caused by the global cryptocurrency exchange FTX incident subsided, trading volume has been observed to decrease compared to before.

According to CoinMarketCap, a global cryptocurrency market tracking site, from the 12th to the 30th of last month when the panic selling eased, the average daily Bitcoin trading volume was $28.12881 billion (approximately 36.7643 trillion KRW). This represents an 8.97% decrease compared to the previous month's average daily trading volume of $30.9011 billion (approximately 40.3864 trillion KRW). It also sharply dropped by 24.87% compared to $37.4424 billion in September.

Bitcoin trading volume surged after Binance CEO Changpeng Zhao announced on the 7th of last month that he would sell FTT, the coin issued by FTX. Following this decision, FTT's price plummeted, and panic selling ensued as not only FTX but the entire coin market was impacted. On the 7th, trading volume increased by 34.43% from the previous day to $53.51085 billion, and on the 8th and 9th, it more than doubled to $118.9 billion and $102.9 billion, respectively. This panic selling continued until the 11th.

However, as the panic selling ended, trading volume began to plummet. Bitcoin prices, which had maintained the $20,000 to $21,000 range before the FTX incident, fell to the $16,000 range, the price level of November 2020. The sideways movement without rebound potential also contributed to the decrease in trading volume. The cryptocurrency investment enthusiasm cooled as FTX filed for bankruptcy protection amid a liquidity crisis, and cryptocurrency lending companies such as Genesis collapsed in succession. As a result, on the 19th of last month, trading volume recorded $16.10622 billion, a sharp drop of 47.88% compared to the previous month's average trading volume.

On this day as well, Bitcoin price showed a downward trend, rising only slightly by 0.13%, unlike the Nasdaq index, which is centered on tech stocks showing synchronization and surged more than 4% on the 1st (local time). As of 9:11 AM, it was trading at $16,969 (approximately 22.07 million KRW), down 1.15% from the previous day. Additionally, concerns about the financial soundness of Tether (USDT), the largest stablecoin designed to be pegged to fiat currency, also seemed to have influenced the decline. As of September 30, Tether's loan amount had increased by nearly 50% compared to the end of last year, and when cryptocurrencies such as Bitcoin were used as collateral, price declines raised soundness issues. Due to these negative factors, Bitcoin rose to the $17,000 range the previous day but immediately fell back to the $16,000 range on this day.