The second is how little effect this has had on markets beyond crypto, or even on the larger cryptocurrencies. Bitcoin and ethereum, the two most popular tokens, lost significant value during FTX’s death throes, but by Monday morning, they had already regained a lot of lost ground. As for more conventional markets, there has as of yet been barely a ripple.
By crypto standards, FTX was a giant, one of the largest exchanges in the world by volume, and valued at $32 billion when it raised money last January. But relative to the financial system, FTX is tiny (the U.S. stock market alone is worth roughly $51 trillion). And more traditional financial institutions have been careful about taking hog-wild bets on crypto the way they did on dodgy mortgage bonds in the early 2000s.
Yet the relative insignificance of the crypto markets to the larger financial picture is exactly why this story is worth paying attention to. For all its prophecies of world-shaking change, crypto remains primarily the province of hobbyists, speculators and gurus. Until last week, Bankman-Fried…