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Monthly Wrap-Up — November

Crypto hits new lows after FTX’s collapse, BlockFi announces bankruptcy, regulations to tighten, and more

In November, crypto prices took a huge hit following FTX’s bankruptcy, leading to an over 25% fall in the combined market cap of digital assets since last month. However, this decline was not without reason.

Read on for our recap for November!

FTX goes bankrupt, alleged of financial mismanagement

FTX’s collapse was, by far, November’s most hard-hitting crypto event. Following a report revealing that a significant portion of the native FTT token’s supply was used as collateral for loans by sister firm Alameda Research, the major cryptocurrency exchange faced a $6 billion bank run.

In the aftermath of the event, both FTX and Alameda filed for bankruptcy. Regulators and authorities are investigating the case amid allegations that the two companies illicitly utilized the funds of the exchange’s customers to finance their operations.

Crypto’s market cap hits new lows

Amid the current crypto winter, with black swan events like Terra’s downfall in May and Celsius’ bankruptcy in July, digital asset prices have been falling steadily.

There’s no swift recovery on the horizon, as the combined cryptocurrency market cap dropped to $785 billion in November, mainly due to FTX’s collapse. At the time of this writing, BTC is trading at $16,500: a new low that hasn’t been seen since December 2020.

BlockFi files for bankruptcy after FTX’s collapse

Despite avoiding bankruptcy due to FTX US’ $400 million credit facility in July, major crypto lender BlockFi went bankrupt this month as the FTX fallout spread. Currently, the insolvent firm is suing the exchange’s founder, Sam Bankman-Fried, to acquire Robinhood shares he pledged to the company as collateral.

Binance commits $2 billion to create a crypto recovery fund

Following FTX’s collapse, Binance pledged to launch a crypto recovery fund to which the company plans to commit up to $2 billion. At the time of the announcement, seven digital asset firms joined the initiative with $50 million, aiming to support high-quality and legitimate industry projects facing liquidity issues.

Proof of Reserves becomes an industry standard in CeFi

In the aftermath of the FTX scandal, Binance, Kraken, and other major CeFi players have agreed to provide Proof of Reserves (PoR) that would enable users to verify that a custodial platform holds enough assets to match the ones customers deposited.

As PoR is set to become the industry standard, Binance’s controversial approach received harsh criticism from Kraken CEO Jesse Powell.

Regulators put a key focus on crypto

As the FTX case shook the industry, crypto has become a key focus among regulators. In addition to the leaders of G20 countries calling it “critical” to design an international regulatory framework, Australia’s Treasury is planning to regulate the digital asset space in 2023.

Exchange outflows hit near-historic levels

The cases of FTX, Terra, Celsius and other CeFi projects impacted by black swan events this year have triggered near-historic levels of Bitcoin exchange outflows in November at the rate of 106,000 BTC per month. This indicates investors’ loss of trust in centralized exchanges, as they are moving their funds to self-custody wallets.

Web3 and DeFi remain the largest emerging tech investment sectors

According to PitchBook’s Emerging Tech Indicator (ETI) report, Web3 and DeFi managed to outrank fintech, biotech, and other top emerging technology markets in Q3 2022. With $879 million invested across 24 deals, the two digital asset sectors took the lead despite the current crypto winter, negative industry events, and the fact that ETI investment faced a 32% quarter-over-quarter decline in this year’s Q3.