Impact of FTX’s Contagion to Continue into 2023: CryptoCompare

This year has been tumultuous for the cryptocurrency industry, with major players like Terra, Three Arrows Capital (3AC), and FTX going underwater.

As the crypto space struggles to find footing amid the second wave of the crypto winter exacerbated by the latest FTX debacle, digital asset data provider CryptoCompare believes it will take a while for the industry to recover from the impact of the collapse.

Crypto Projects to Focus on Survival

In its 2022 Year in Review report, CryptoCompare noted that it would take some time for the market to fully recover from the impact of FTX’s collapse, as the exchange’s ties to numerous crypto firms will continue to influence the industry’s recovery into the new year.

Nonetheless, the FTX debacle has also highlighted the need for developers to create sustainable projects.

As such, CryptoCompare predicts that in 2023, there will be a greater focus on “protocols and projects focusing on survival through cash preservation and on building applications with a market-product fit, rather than on marketing and copy-cat initiatives.”

Increased Regulatory Clarity Expected in 2023

The crypto data provider also suggested that the FTX bankruptcy may encourage more global financial regulators to establish frameworks for regulating the crypto market.

Some regulators are already implementing stringent measures to protect investors. For instance, the Thai Securities and Exchange Commission recently announced plans to incorporate stricter regulations on crypto assets.

CryptoCompare believes these regulations will be more effective if they distinguish between centralized and decentralized entities within the crypto space, as many failed companies were centralized. This distinction would also foster continued innovation in the decentralized finance sector.

A Time for Reflection

In conclusion, CryptoCompare believes the crypto winter offers a chance for market participants to reflect and focus on developing the industry while preparing for the next bull run.

“In 2022, we saw the end of the bull market and the start of a bear cycle, which provides market participants with an opportunity to take a step back, reflect on the developments of the industry, and plan for the future,” the report said.

While disheartening, bear markets are one of the proven ways to filter the broader market as they show that investors are in the market for the long term, not for speculation and short-term gain.

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