The market is still stunned and waiting. It must be said that this is a completely normal reaction in these circumstances. Normally, when a crash of these characteristics is caused by something as important as what FTX has caused, there must be a “digestion” of the event, which we know as distribution.
And this is what we are seeing with this lateral range that has also come to coincide with Thanksgiving week, which leaves the US market at half throttle.
Bitcoin draws us uncertainty
The reading that we can extract from this situation is very imprecise. The market has remained in the new low zone generated by the fall and volatility has progressively decreased.
This does nothing more than draw a wait on the part of the operators to make decisions. The question that everyone is asking is if this is over now, or will we have more surprises. Unfortunately we do not have a reliable answer, but it does seem clear that this will cause a turning point in the industry. An industry very accustomed to changes, to which it adapts quickly
An examination of what has happened in recent days clearly shows us this sideways trend, which does not have significant volume and which keeps BTC in a price channel.
Ethereum tries to overcome the bearish trend
We have been commenting for days now that the main difference between the two largest assets is that BTC has maintained positions above the bearish guideline that comes from the all-time high, while the second most important asset has not yet been able to recover it (The FTX episode , surely prevented him from achieving it)
The situation is therefore much more complex in this case, and once again it is trying to achieve that break that could change the dynamics of recent months. Of course, at this time, if this movement occurs, we will have to wait for it to be confirmed with volume. A volume that is still missing in this distribution process
Recovery… for when?
That is the question that everyone is asking and to which we have no answer. We are still pending that the tsunami caused by FTX does not take any other actor with it. It is a fact that it could happen.
But despite everything, it must be said that taking into account the volatility of these assets, the prices that would make us return to the situation prior to FTX are not that far off and that, if the market situation allows it, and the actions that are carried out recover investor confidence, we could see again shortly
Proof of Reserve… recovery fund and much more
It seems that a recognition of the need to establish clear regulation in the sector is spreading in an important way. The size it is acquiring and its growth potential make it absolutely necessary, but while this regulation has not arrived, we see different initiatives from the same industry to establish a certain framework of action, based on transparency
We can later evaluate the convenience or real effectiveness of these measures, but it is clear that important parts of the sector are making an effort to change certain dynamics and offer, above all, transparency and security.
The absence of them has caused the flight of capital towards decentralized protocols
We can see in the historical graph the significant increase experienced by the capital managed by decentralized protocols. In view of this, the CEX have begun to deploy measures to offer that transparency that allows them to regenerate that trust
In parallel, different measures are being applied, such as Binance’s proposal to create a rescue fund that has already capitalized with 1 billion USD and has stimulated other players in the industry to join the initiative. A fund that serves to alleviate the damages of cases like the one we have experienced and that tries to safeguard the capital of investors
Naturally, these measures do not make sense if those who can take advantage of them do not submit to a certain commitment or regulatory framework of good practices, which will be the next step
Security… in the decentralized world
But the decentralized world has not been immune to these movements, and we have also seen how the main wallet provider, Consensys, with Metamask, changed its policies and announced that it will add traceability to transactions, a first step to link it to KYC processes.
We can have a debate about the appropriateness of these measures, but what is clear is that from the point of view of market stability, everything that is done in this direction will be positive.
We will have to see how the delicate balance is managed between providing that transparency and security and continuing to protect the privacy (not anonymity) offered by decentralized finance