Cryptocurrencies lose 71% of their capitalization since November 2021

The market environment was already difficult before the FTX collapse, as the effects of sustained interest rate hikes and risk aversion in a bear market led to what is known as “crypto winter”.

The falls in the prices of cryptocurrencies, the loss of investor confidence and an accelerated reduction in the market capitalization of the entire sector are some of the consequences of this winter.

According to data from coinmarketcap.com, the market value of all cryptocurrencies has fallen 71% from its all-time high of $2.83 trillion on November 11, 2021. Now the virtual currency market is worth around $804.557 million. Dollars.

Bitcoin, the most relevant cryptocurrency in the market, has lost 63.9% of its value so far this year.

Other cryptocurrencies such as Solana (-93.28%), Avalanche (-89.25%), Polkadot (-82.82%), Cardano (-79.66%), Cosmos (-71.66%), and Ethereum (-66.48%) also report sharp declines in the year.

The collapse of exchange platforms such as Terra and Voyager Digital marked the starting signal for a downward race that dragged the entire sector down.

The fall accelerated in the last quarter of the year, after the bankruptcy of the cryptocurrency broker, FTX, which was valued at 40,000 million dollars.

The risk is always implicit in the (cryptocurrency) market regardless of the circumstances, what the bankruptcy of FTX brought about was increased volatility,” said Cipactli Jiménez, a private investor.

Institutional investors maintain their interest

Despite the volatility, institutional investors remain interested in continuing their cryptocurrency investments.

According to a Coinbase survey that includes 140 institutional investors, 62% revealed that they increased their exposure to cryptocurrencies in the last 12 months.

Jiménez added that the biggest concern of institutional investors revolves around the approval of a spot ETF linked to Bitcoin.

However, the recent events surrounding the bankruptcy of FTX have changed the political agenda of the Securities and Exchange Commission in the United States, headed by Gary Gensler.

In an interview with Cointelegraph, Perianne Boring, CEO of the Chamber of Digital Commerce, stated that the delay in the approval of a spot ETF is due to political rather than economic factors.

“On the House side, we are going to see increased oversight efforts, but I don’t think crypto is really the priority,” Boring said.

victor.barragan@eleconomista.mx