Realized Losses From FTX Collapse Peaked at $9B, Far Below Earlier Crises

According to Chainalysis, weekly realized losses peaked at $20.5 billion when Terra Luna (LUNC) crumbled and reached $33 billion when 3AC and Celsius failed.

Chainalysis, a blockchain analytics business, sought to put the FTX collapse into context by comparing peak weekly-realized losses in the aftermath of the exchange’s failure to similar large crypto falls in 2022.

According to the Dec. 14 report, the depegging of Terra USD (UST) in May resulted in weekly-realized losses of $20.5 billion, while the following collapse of Three Arrows Capital and Celsius in June resulted in weekly-realized losses of $33 billion.

Weekly realized losses during the FTX scandal peaked at $9 billion in the week beginning Nov. 7, and have been decreasing weekly since then.

According to Chainalysis, the data indicates that by the time the FTX fiasco occurred in November, investors had already been smacked with the “heaviest” crypto events this year.

“The data implies that the most damaging [crypto] events were already behind investors by the time the FTX disaster occurred.”

Total realized losses were computed by looking at personal wallets and assessing the value of assets as they were obtained and subtracting the value of these goods when they were transferred elsewhere.

However, since it treated every transfer from one wallet to another as a sale event, the data may have exaggerated realized losses. Chainalysis also pointed out that the graphic does not account for other information, such as frozen customer money on FTX’s exchange.

“Because we can’t assume that every bitcoin transmitted from a particular wallet will be liquidated, consider of these values as an upper limit for realized profits of a specific wallet,” it stated.

While Chainalysis’ data only covers realized losses, on-chain analytics firm CryptoQuant recently published statistics on how the FTX crash affected Bitcoin’s net unrealized losses.

Unrealized losses for BTC peaked at -31.7% after the FTX collapse, compared to -19.4% following the collapses of 3AC/Celsius and Terra Luna.

In a Nov. 17 tweet, analytics data company Glassnode also emphasized the huge degree of unrealized losses after the FTX crash, comparing it to the peak of -36% witnessed during the 2018 bear market.

Unrealized earnings or losses on an investment are deemed unrealized until the investment is sold. These losses or profits are “realized” when you sell. Unrealized losses are often referred to as paper losses.