For many cryptocurrency traders, the events of one year ago remain permanently etched in memory.
"It was the worst day of my career and one of the worst days of my life—the day FTX froze withdrawals," wrote Travis Kling of Ikigai Asset Management in a November 7 tweetstorm. Four days later, Sam Bankman-Fried's exchange filed for bankruptcy, marking what many consider cryptocurrency's darkest chapter.
The Aftermath of FTX's Collapse
The industry has undergone irreversible changes yet remains familiar in many ways:
- Leverage Drought: The abundant leverage that propelled Bitcoin to its November 2021 peak near $69,000 has nearly vanished
- Celebrity Exodus: Influencers promoting NFTs and meme coins have largely retreated
- Regulatory Crackdown: Agencies like the SEC and CFTC have intensified oversight
- Institutional Entry: BlackRock and other financial giants are entering the space, with the SEC approving Bitcoin ETFs
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Market Transformations Post-FTX
Liquidity Shifts
- OTC trading desks have consolidated to more conservative operators
- Reduced leverage has created liquidity constraints
- New lending programs and Bitcoin ETFs aim to fill the void
NFT Market Contraction
Weekly NFT trading volumes have halved since FTX's bankruptcy, representing the hardest-hit crypto sector.
Global Regulatory Responses
FTX's collapse triggered worldwide regulatory action:
- EU's MiCA Regulation: Established comprehensive crypto asset framework
- US Enforcement: SEC and CFTC investigations into major exchanges
- Binance Pressure: Forced exits from Canada, Netherlands and other markets
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Venture Capital Retreat
Cryptocurrency VC funding plummeted 63% YoY to $2 billion in Q3 2023:
- Due Diligence Intensified: Founders now face rigorous background checks
- Geographic Shifts: Startups favor crypto-friendly jurisdictions like Singapore and EU nations
- Investment Focus: Many VCs have pivoted to AI and other emerging technologies
DeFi's Resurgence
FTX's centralized failure renewed interest in decentralized alternatives:
- TVL Recovery: DeFi protocols show recent growth despite overall decline
- Innovation Wave: New derivatives platforms and transparent credit solutions emerging
- Custody Awareness: Users increasingly value self-custody solutions
FTX's Potential Revival
Three bidders currently compete to reboot the exchange through asset auctions, potentially marking an unexpected second act.
Frequently Asked Questions
Q: Has cryptocurrency recovered from FTX's collapse?
A: Bitcoin has regained all losses since May 2022, though market structure has permanently changed.
Q: What's the biggest regulatory change post-FTX?
A: The EU's MiCA regulation establishes the first comprehensive crypto framework for 27 nations.
Q: Are institutions still entering crypto?
A: Yes—BlackRock's Bitcoin ETF approval signals continued institutional interest despite the bear market.
Q: Is DeFi safer than centralized exchanges?
A: While eliminating third-party risk, DeFi carries smart contract vulnerabilities—users must weigh tradeoffs.
Q: Will FTX actually relaunch?
A: Bankruptcy proceedings continue, with multiple parties expressing interest in acquiring FTX assets.
Q: What lessons did VCs learn from FTX?
A: Investors now prioritize rigorous due diligence and avoid "irrational exuberance" in crypto startups.