Analysts: the main trend of 2023 is the decentralization of markets

After the collapse of FTX, many cryptocurrency enthusiasts lost confidence not only in exchanges, but in the industry as a whole. Many investors began to withdraw their funds to hardware wallets or fiat, and then change their field of activity.

Another part of cryptocurrency investors began to make their choice in favor of decentralized sites. Platform owners such as Changpeng Zhao from Binance began to struggle with customer distrust. With such a development of events in networks, opinions began to appear more and more often that in the future the cryptocurrency industry could turn towards full decentralization and save people from the presence of centralized platforms.

This opinion was also reached by the director of strategies at Binance, who allowed the disappearance of Binance after 10 years. Now Citi bank analysts have shared their opinion. The latter conducted a study in the field of virtual assets and shared the results.

According to analysts, interest in the leverage of the cryptocurrency market and in the industry as a whole is at historically low levels. Next year, according to them, the development of decentralized platforms will become a new trend. Their essence lies in the complete absence of centralization as such.

In short, such a market gives users the opportunity to trade, invest and use other financial instruments to achieve their goals, however, there will not be one dedicated place where assets would be located, placing them on the blockchain. This way of saving money attracts the attention of investors who want to avoid big risks.

This development of the cryptocurrency sphere was influenced not only by the collapse of FTX, but also by the failures of other projects that preceded it. Earlier in 2022, representatives from Terra (LUNA), Three Arrows Capital, Celsius Network and others reported financial insolvency.

Terra (LUNA) opened the season of falling exchanges on May 7

The situation with FTX is different from previous cases, since at different times the American cryptocurrency exchange was in 2nd and 3rd places in terms of the amount of client funds available. It is also worth noting that after the collapse of Sam Bankman-Fried, it turned out that many other cryptocurrency projects kept almost all (and in some cases all) of their funds on FTX. This led to almost insurmountable problems, due to which they will also be forced to declare bankruptcy and stop their activities.

According to Citi Bank analyst Joseph Ayub, the loss of interest in derivative financial instruments has disappeared not only among ordinary investors who tend to carry out extremely risky transactions, but also among institutional ones. The latter, in turn, should be called professionals in their field and the loss of interest in futures speaks of a really bad situation in the cryptocurrency market.

It is noteworthy that, against the backdrop of macroeconomic news, it has recently fallen by 61%. For clarity, it is worth drawing an analogy with the fall of the S&P 500 index, which amounted to 18%. For the first time in a long time, the total capitalization of the cryptocurrency market fell below $1,000,000,000,000,000. In April-May and November 2021, this value was above $2,500,000,000,000,000.

Citi also pointed out that lenders FTX, Celsius Network and Voyager are excellent examples of failed investments in centralized exchanges. Because of this, in the future, lenders will try to avoid such investments and think about deposits in sites that use the principle of decentralization. This adds another point to the hypothesis about the development of the DeFi sector in the field of cryptocurrencies.

At the moment, open interest in the flagship cryptocurrency is $9,000,000,000. At its peak, this figure was expressed in larger numbers and exceeded the $23,000,000,000 mark. After the collapse of FTX, interest in decentralized sites, on the contrary, became higher, which is quite expected and natural.

Earlier, we shared our thoughts with you in a material about the possible future of the world of cryptocurrencies. In the same place, we discussed why the DeFi sector can become the future of cryptocurrencies. If you missed it, then we invite you to familiarize yourself by clicking on this link.