The report says that asset valuations are in question after the collapse of FTX.
Cryptocurrency investors will be more careful when choosing which platform to use, he estimates.
The analysis firm Kaiko released the lessons that it believes investors and the cryptocurrency industry should learn by 2023. It did so after analyzing the main events that defined the market, as well as the price of its assets, throughout 2022.
His report claims that the FTX crash was the biggest event of the year for the industry and probably the most widely covered in the history of cryptocurrencies. He details that concerns by FTT, the FTX token, led to massive outflows from the exchange, which halted the withdrawals shortly before filing for bankruptcy.
Ruling that “the collapse of the FTX revealed a scam of epic proportions”, with embezzlement of its clients’ funds and a lack of USD 8,000 million of liquidity. And, in retrospect, he cautions that “it seems obvious that FTT was a massive vulnerability, like a token with almost no utility, liquidity, or demand.” Therefore, looking to the future, he sees this situation as an opportunity to learn.
You have to question businesses, balance sheets and asset values, he says
“To prevent the next FTX collapse, the industry must question all business models and balance sheets, and demand transparency from the centralized venues they use,” he says. In turn, given the lack of liquidity that this exchange demonstrated, he suggests that the investors will be more careful when choosing which platform to use.
In addition, he stresses that the industry must begin to recognize that market capitalization and fully diluted valuation [capitalización estimada de un activo cuando se emita su cantidad máxima] They are theoretical numbers. “They do not accurately reflect the value of a token, especially if a large holder is looking to cash in [tomar ganancias]”, Explain.
In this sense, he summarizes that “asset valuations are questioned after the collapse of FTX”, added to that of Terra. He mentions that the latter “was also a great example of the importance of on-chain data when investigating warning signs of a token or project’s health.”
He also comments that the bankruptcy of lender Celsius in 2022 demonstrated the risks involved when centralized platforms invest customer balances. Therefore, it indicates that if the returns of an investment product seem too good to be true, they probably are.
The Fed Might Give Crypto a Breathe in 2023, Estimates Report
On another topic, the report states that 2022 was marked by a change in the monetary policy regime to lower global inflation. He explains that this was seen in the interest rate hikes set by world central banks, ending a nearly decade-long period of loose monetary policy.
Such a scenario slowed down traditional investment and in cryptocurrencies, as reported by CriptoNoticias. And he believes that concerns about the global recession and liquidity tightening will continue to weigh on risk assets, especially as quantitative tightening accelerates.
However, he hopes that the Fed (United States Federal Reserve) and other central banks slow down the pace of rate hikes in 2023. And he thinks that would perhaps provide “breathing space for risky assets,” including bitcoin and the cryptocurrency market.