The FTX implosion wasn't crypto's darkest hour of the year – these 2 crises were even more disastrous for digital assets
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- FTX's bankruptcy wiped out $9 billion worth of crypto investments, according to Chainalysis.
- But that figure is dwarfed by the losses caused by two other crises that rocked digital assets in 2022.
- The Terra Luna crash and the collapse of Celsius and Three Arrows Capital caused more damage, Chainalysis said.
The collapse of FTX has rocked the crypto industry – but two other crises erased even more value from the embattled sector this year, according to Chainalysis.
The Terra Luna crash in May and the fall of lending firm Celsius and hedge fund Three Arrows Capital (3AC) in June both caused greater losses than the exchange's bankruptcy filing, the blockchain intelligence firm said this week.
Terra's failure resulted in $20.5 billion of realized losses for digital assets, while the fallout from the downfall of Celsius and 3AC wiped out $33 billion.
In comparison, FTX's collapse last month caused a $9 billion damage, per Chainalysis.
"Our data suggests that FTX's demise hasn't been crypto investors' biggest issue this year," analysts said in a blog post. "Both the depegging of Terra's UST token and the collapse weeks later of Celsius and 3AC drove much bigger realized losses."
"From a market-wide point of view, the data suggests that as of now, the heaviest hitting crypto events were already behind investors by the time the FTX debacle took place," Chainalysis added.
The losses reflect a brutal year for digital assets, plunged into a so-called crypto winter by sharp increases in interest rates and multiple high-profile bankruptcies.
Bitcoin has plunged 63% year-to-date to around $17,000, while smaller cryptocurrencies solana and polkadot now trade around 95% below the all-time highs they reached in 2021.
The fall of Terra's dollar-pegged stablecoin UST and its sister token luna in May marked the start of the downturn in the eyes of many investors. The two cryptocurrencies entered a so-called "death spiral" after UST slipped away from its supposedly fixed value of $1.
Crypto lender Celsius added to the misery a month later when a broader sell-off led to it freezing all of its customers' accounts.
That led to the overexposed 3AC filing for bankruptcy in July, spreading the contagion to other firms as it defaulted on loans to companies including BlockFi and Voyager Digital.
The scandal-hit sector is now reeling from the collapse of FTX.
The exchange suffered a solvency crisis last month after a report alleged that its sister trading firm Alameda Research held a significant amount of its portfolio in its native FTT token.
That led to an eventual Chapter 11 filing and the arrest of now-disgraced founder Sam Bankman-Fried – who is currently in a Bahamian jail awaiting extradition to the US on fraud and money laundering charges.