Allow us to state the obvious: There’s been a lot of doom and gloom in conversations around cryptocurrency over the last month. This is warranted to an extent: FTX, one of the industry’s biggest and seemingly most stable crypto exchanges, collapsed virtually overnight thanks to a lack of transparency and closely held, centralized, irresponsible power. And of course, the demise of FTX caused cryptocurrency prices to fall. But let’s get down to brass tacks: How bad was FTX’s collapse for crypto investors? And was it as bad as other market-shaking events this year? We’ll answer those questions below using on-chain methodology to calculate the FTX investor impact by looking at investors’ realized losses across the ecosystem. We can measure realized gains and losses for a set of personal wallets in a given period of time by measuring the value of each wallet’s assets at the time they were acquired, minus the value of any portion of those assets sent to another wallet during the time period studied, while also accounting for pricing differences at different times the assets were acquired (e.g. a wallet holding some Bitcoin acquired at $30,000 and some acquired at $20,000). We can’t assume that any cryptocurrency sent from a given wallet is necessarily going to be liquidated, so think of these numbers as an upper bound for realized gains of a given wallet.
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