FTX collapse was predictable.
FTX, FTT, SBF, Alameda Research, Genesis, centralized exchange, collapse, crash — I’m sure your news feed has been eclipsed with such words for the past few weeks.
Contora team is engaged in collecting and analyzing alternative data (mostly social and technology-related) on crypto projects and startups. We won’t be covering the whole FTX situation in this story (since you already know what happened!), but considering that it has a huge footprint on the entire market, we want to show you how the FTT token was doing based on off-chain data indicators.
First, let’s take a look at a bit obvious indicators — both Twitter and Reddit FTT’s mentions grew 1000x after Nov. 5:
Then Mr. SBF stated that everything was fine 🥲 on Nov. 7:
But it was only according to SBF :) No one really knew for sure if FTX was in real trouble or not, and the trust in “Assets are fine” was decreasing each hour. Users started asking questions and wanted to get answers from other FTX executives and community members, that’s why we see a huge increase in the number of Telegram and Reddit members after Nov. 7:
Get ready, the most mindblowing (at least we think so) part of this research is about to reveal — the sentiment of Reddit mentions.
We previously mentioned that we’ve trained our model on 100M tweets and Reddit comments, and we measure sentiment on a 0 to 1 scale, where 0 — is completely negative and 1 — is positive.
While FTX started to appear in the news after ~Oct. 29, its sentiment started to decrease significantly as early as Oct. 17:
Looks strange, isn’t it? After staying at a relatively neutral level for the past couple of months, we discover such a drop. Looking closely at FTT’s sentiment, we can see that people were competing, sharing both negative and positive expectations about it. But negative thoughts took the lead here as a result:
FTT Reddit sentiment (grouped by days)
Here are some examples of negative FTT mentions:
It’s also worth mentioning that FTX’s collapse affected other crypto exchanges as well. For example, the sentiment of Binance (BNB) Reddit mentions also started to move in the negative direction after early November, so you better pay closer attention to what these Redditors are talking:
However, decentralized exchanges like Uniswap (UNI) look more promising in terms of Reddit sentiment:
Hope you loved today’s quick touch on FTX collapse from the off-chain data perspective. Could the collapse be predicted?
Well, we clearly showed that FTT’s sentiment went down almost 2 weeks before it became the main topic of discussion everywhere. Theoretically, if you noticed this and went reading what community members were sharing about FTX — it would give you more information about the current situation and make you pay closer attention in the next few days/weeks as a minimum, or move your funds to a safer place as a maximum.
Leave some claps to this story and show your interest if you want us to make a deeper analysis of how other exchanges are doing in the current market situation 👏 You can actually hold down the clap button all the way until 50 to share your interest :)
P.S. If you represent a business and are interested in predicting such collapses like FTX and getting access to these and many other dashboards (social media sentiment, development activity, etc.) or API, just drop me a line (vlad at contora.ai)
