Just when Indian crypto investors were starting to get active again after signs of consolidation across the crypto ecosystem, digital assets crashed again as Binance announced it’s selling off all its FTX Token (FTT) due to swirling rumours that the third largest global crypto exchange FTX could be heading towards bankruptcy.

FTT tanked more than 30 percent after that announcement, and that led to a broader market contagion in which all major currencies tumbled.

The overall market cap of the market slid under $1 trillion again after crossing it in late October post a three month hiatus.

The event was kickstarted by a report published by a crypto news website on November 2 that threw a spotlight on the shaky balance sheet of Alameda Research, a hybrid investment fund and market maker for FTX.

But the ensuing public war of words between the CEO of the largest crypto exchange by volume (Binance), Changpeng Zhao and FTX CEO Sam Bankman-Fried has kept the market on tenterhooks.

Late Tuesday night, Binance announced it will be taking over FTX, pending due diligence.

At 5.30 PM on Tuesday, the largest digital currency, Bitcoin, was trading at $19,708, down 5.04 % in the past 24 hours on the Coinmarketcap site. Ethereum was trading at $ 1480 (-6.41%), Solana slid to 28.12 (-11.07%) and Cardano had dropped to $ 0.384 (-5.84). Dogecoin slipped $13.04 % and was trading at $0.101 and the other popular meme coin Shiba Inu, slid 8.70% to $.00001097.

As the meltdown unfolded, the Indian investors were a worried lot after being scorched by a similar event—the Terra Luna fiasco—some months ago.

“The Indian crypto investors are once again in panic mode. FTX failure could become a big issue for crypto, and the Indian investors are very wary after being singed by Luna. Slowly, people are realising that even storied projects and exchanges could turn out to be very vulnerable. All this is not good for crypto in India,” said Vishal Gupta, a Noida-based crypto investor.

In nearly a year of crypto winter, trading volumes on Indian exchanges crashed as asset prices declined and an aggressive tax regime reduced the incentive to invest/trade in crypto.

Chahal Verma, a Gurgaon-based investor and social media influencer, said that Bitcoin was under the $20K level again, which had scared investors, but it was just a reminder that a small price pump did not mean that the bear market had ended.

“Crypto is an extremely volatile asset class, and while fundamentals and technical indicators may change, investors need to focus on the same key rule, which is to stay alert and protected by learning when it’s time to sell, cut losses, or book profits, along with not getting excited by temporary moves,” she said. “We need to be patient and observe instead of taking impulsive decisions.”

However, the sophisticated crypto investors are trying to get over the crypto winter and market shocks by adjusting their portfolios and buying selectively.

“I am holding mostly. I have been putting my tokens to work (staking, partaking in DeFi etc.). It doesn’t make sense to sell me at a loss at this point. I’ve stopped buying since April to avoid tax headaches, just rotating my existing portfolio between tokens as per opportunities,” said Mumbai-based, 25-year-old software engineer Ashwin Nadar.

Experts say that earlier crypto markets had been consolidating due to the positive fundamental changes happening in the ecosystem, be it Google Cloud accepting crypto payments, Elon Musk hinting at turning Twitter into a Web3 project, or Hong Kong aspiring to become a global crypto hub by legalising crypto trading.

Even the trading volume trend lines of leading Indian exchanges like Coindcx, Coinswitch and WazirX at Marketgecko had started recording a slow but consistent rise in trading levels in the last month or so after jumps in some major currencies like Ethereum, Binance, Matic and Dogecoin.

Experts say that while the Binance-FTX fracas might dent the market in the short term, over the long term, the market will bounce back. “I strongly believe crypto prices will be trading in positive territory around 2 quarters from now,” said Khaleelulla Baig, co-founder and CEO of Koinbasket.