November is a month that crypto enthusiasts across the world would want to forget in a hurry and it typifies how 2022 has been so far, following the bearish market and the series of events that have led to the loss of billions of dollars in investments. The recent collapse of FTX and the possibility of other platforms falling with it have made the space look even more gloomy for existing and potential investors. So the major question on the lips of millions of people in different parts of the world is – is there a silver lining?
The unexpected fall of FTX has literally crumbled the portfolio of millions. However, its collapse and the possibility of pulling down other exchanges could have a positive effect on the market in the long run. Recent happenings reveal that exchanges have been running fractional reserve-like banks for their own investments to provide users with a “guaranteed” yield.
The popular phrase across social media that “If you don’t know where the yield comes from, you are the yield!” has been made true by the activities of crypto exchanges. Crypto exchanges were portrayed to be highly liquid with revenues running into billions and lots of tokens on their books. However, their inability to meet withdrawal requests indicated that these exchanges used investors’ funds for funding highly speculative bets as well as illiquid assets that made it difficult to get back stablecoins, Bitcoin, and Ether upon request of clients.
The recent occurrences led to investors making the panic withdrawal of significant amounts of Ether, Bitcoin, and stablecoins from exchanges, as reported by Cointelegraph. The trend of coins being withdrawn from exchanges and getting into hardware wallets could continue and spell doom for the crypto space if the “temporarily pausing of deposits and withdrawals” messages continue to appear.
A recent report by Cointelegraph revealed that DEXs and DeFi witnessed an uptick in inflows as well as concurrent record outflows. This is not particularly surprising, as the level of distrust in crypto companies and platforms has increased significantly. Experts have predicted a possible shift in the trend to more Web3-focused DEX and DeFi protocols.
As mentioned earlier, the recent happenings in the crypto space could be a blessing in disguise, depending on the side of the divide one is. The price of Ether looks a bit soft at the moment and concerns from the United States Office of Foreign Assets Control could lead to a series of even impacting the price of the altcoin.
The level of uncertainty surrounding the Shanghai upgrade, its enactment, and the concerns of investors about the ease of withdrawing staked coins are other topics that continue to drive conversations around the short-term sentiment of Ether. With ETH holding support between $1,200 and $1,300, the aforementioned challenges could lead to a turnaround in the fortunes of the altcoin. It could also be an opportunity for stakers to open a low-level short position with TP orders at the $700–$600 region.