In a tweet dated November 12, the famous commentator argued that the events of the week were actually not new to Bitcoin.
FTX “The Real Black Swan Event”
Although down 25% in days, BTC/USD is not doomed as a result of the bankruptcy affecting FTX, Alameda Research and possibly other major crypto companies.
For the Stockmoney Lizards, the crash, while abrupt, is not much different from the liquidity crises that occurred earlier in Bitcoin’s history.
“We’ve already seen a real black swan event, which is the bankruptcy of FTX,” she said.
“Bitcoin’s history is fraught with such events and the market will recover from them as it has in the past.”
The accompanying chart references similar Black Swan moments from the past, and extends back to Gox Mountain’s breach in 2014.
Two other notable events are the Bitfinex exchange hack in 2016 and the COVID-19 market crash in March 2020.
Annotated BTC/USD chart. Source: Stockmoney Lizards / Twitter
As Cointelegraph reported, former FTX CEO Zane Tackett even offered to copy Bitfinex’s liquidity recovery plan from the time of its $70 million loss by creating a token. FTX later filed for Chapter 11 bankruptcy in the United States.
Reactions included candid assessments of the crypto industry, with Filbfilb, co-founder of trading group DecenTrader, predicting a multi-year payback.
Changpeng Zhao, CEO of Binance, which at one point planned to buy FTX, warned that the industry has been “down a few years.”
Exchange reserves of BT near a five-year low
Meanwhile, the loss of user confidence is already visible in the declining exchange balances.
Related: Losing Traders Sitting on 50% of Bitcoin Supply After Bitcoin Drops $5.7K
According to data from cross-chain analytics platform CryptoQuant, BTC balances on major exchanges are now at their lowest levels since February 2018.
The platforms tracked by CryptoQuant ended November 9 and 10 down 35,000 and 26,000 BTC, respectively. Both days were multi-month records, yet the one-day tally from June 17th did not exceed 67,600 BTC.
Industry analysts still monitor the exchange’s outflows, and CryptoQuant contributor Maartunn is among them.
Bitcoin exchange reserves chart. Source: CryptoQuant
More broadly, voices have been calling for social media users to withdraw money from custodial wallets.
“Bitcoin exchanges are run by people who have learned fiat finance,” Saifedean Ammous, author of the popular book The Bitcoin Standard, wrote in a bit of a Twitter post:
“Gambling with depositors’ money is normal and healthy for them, because in the cash deposit system, the central bank destroys the currency to save them every time something goes wrong.”