Bitcoin and altcoins continue their fall amid the FTX debacle.
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Bitcoin and altcoins continue to fall amid investor panic over the failure of FTX.
Cryptocurrency markets have fallen precipitously for the second day in a row, with several reasons, the main one being that Binance may abandon its purchase of once-strong rival FTX.
Alarming market sentiment.
Traders have yet to forget the Terra Luna crash in May, which contributed to bitcoin’s decline for almost a month and a half. Current events have led analysts to believe that something similar is happening with the current FTX bank withdrawal.
Consequently, there are growing concerns about the crypto industry as a whole.
The price of Bitcoin has reached a new annual low of $16,140.61
Other cryptocurrencies are following suit.
Source: Coin 360
According to reports, FTX apparently wanted funding for its balance sheet. The amount started at $1 billion but managed to grow to $5-6 billion in half a day to fill the gap in its balance sheet, potentially putting the deal in jeopardy.
Where did it all start?
On November 6, 2022, in a microblog, the head of Binance giant Changpeng Zhao announced his intention to sell a large batch of utility tokens of the FTX trading platform – FTX token (FTT). The sale will take place gradually, in batches, this will help mitigate the impact on the market of such a large sale. Cryptocurrency exchange FTX sold its stake to Binance for $2.1bn, putting the FTT cryptocurrency under the control of Binance.
Binance decided to sell FTT after a Coindesk investigation on 2 November: the authors found questionable transactions between FTX and Alameda Research, and suggested that Alameda Research was insolvent.
Alameda Research has a dubious reputation and was accused in April 2022 of manipulating the WAVES token.
Binance chief executive Changpeng Zhao said he did not want to “support people who act against other industry players behind their backs.”
The FTX team responded that the allegations were based on “false rumours” and that Binance was trying to crush a competitor. Although Binance’s founder has denied the allegations on Twitter, analysts believe that Binance’s actions are aimed at eliminating the competitor.
There are rumours circulating on the internet that Alameda may be getting rid of its reserves. According to some sources, the corporation may sell its stakes in Bitcoin, Ethereum and Serum. The fall of BIT, which we talked about earlier, and the confirmed information that a significant amount of coins were transferred from FTX to Alameda’s wallet have added fuel to the fire.
In the end, so far, the only victims of this battle have been ordinary crypto-investors, who have lost solid sums on this confrontation.
Some users believe that the sale of FTT tokens will bring liquidation to the trading platform, and the exchange Binance will not benefit from this, losing the trust of investors.
Bottom Line
The lack of funding for FTX and past investor fears of bankruptcy are factors contributing to the cryptocurrency’s decline in value.
At the same time, investor appetite for risk is likely to remain low, and would-be cryptocurrency traders may consider refraining until there are signs that US inflation has peaked and the regulatory framework is more certain.