What the Heck is Happening in the Crypto World?

November 17, 2022
2 mins

The crypto world has endured the doldrums of a long winter dating back to last year, and it’s not clear at the moment when or if the seasons will ever change. 

Tough times globally for traditional markets and crypto’s internal weaknesses have combined to create a chaotic situation that feels as if it’s nearing an apex — but how bad is it?

Fall from grace

  • Feeling pessimistic: Dating back to 2021’s November rally, Bitcoin has fallen 73%, Ethereum is down 71%, and a variety of other projects like Cardano, Polygon, Polkadot, Solana, and more are all down 50% or more as 2022 has crushed crypto sentiment all around. 
  • A rough year: After an already bearish spring, summer brought us an array of events that all hurt crypto’s morale even more. We had the TerraUSD crash back in May, followed by a spree of crypto bankruptcies in July, a stable, mundane Q3 as concerns lingered, and now we’re faced with another possible market contagion.

What happened this time?

  • FTX explained: FTX was one of the fastest-growing crypto exchanges in the world. You’ve probably seen them everywhere — they spent 15% of their revenue on marketing in 2021. It was valued at $32B as recently as January and has now filed for bankruptcy
  • The details: Basically, crypto exchange Binance had a large stake in FTX that they recently chose to sell, a transaction for which they accepted payment in the form of FTT, which is FTX’s native (and illiquid) token. This flooded the market with FTT tokens and tanked its price, which is bad enough, but even worse when you learn that SBF, Sam Bankman-Fried (FTX’s now former CEO), also owns a trading fund (Alameda Research) that happened to hold a lot of FTT on its books.
  • The aftermath: This led to a liquidity crunch and eventually insolvency. FTX CEO SBF quickly agreed to a deal with Binance to buy out FTX and promptly shut down Alameda Research too, but that deal fell through as Binance decided it wasn’t in their best interest. In the meantime, FTX needs $8B worth of emergency funding (that no one wants to foot) to cover withdrawal requests received in recent days as a lot hangs in the balance.
  • And the after-shocks: On the day FTX filed for bankruptcy, a mysterious hacker stole about $400 million in digital assets from the exchange. We then learned that another crypto exchange,, accidentally sent $400M in Ethereum to the wrong address they were able to recover days later. is now busy reassuring customers that their deposits are safe and that the company is on solid footing. Let's hope that's the truth.

What's next?

What this means for crypto depends heavily on who you ask. However, no matter which way you lean, this incident raises some objectively viable concerns in the areas of transparency and overlap as we’ve now watched multiple cracks result in dominos toppling across the crypto landscape.

Take this related lesson on this topic and earn Dibs 🟡 while you're at it:

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