- Cryptocurrencies have remained under pressure this week after Binance said it was pulling out of a deal to purchase failing rival FTX Trading
The world’s largest and most popular digital token Bitcoin’s price today was trading nearly a per cent lower at $16,869, after plunging to $15,800 level, its lowest level since November 2020 early this week. The global crypto market cap today slipped below the $1 trillion mark, as it was almost down over a per cent in the last 24 hours to $890 billion, as per CoinGecko.
Cryptocurrency prices have remained under pressure this whole week after crypto exchange Binance said it was pulling out of a deal to purchase failing rival FTX Trading.
On the other hand, Ether, the coin linked to the ethereum blockchain and the second largest cryptocurrency, however rose by more than 2% to $1,260.
Meanwhile, dogecoin price today was trading about 2% lower at $0.08 whereas Shiba Inu was also down over 3% to $0.000009. Other crypto prices’ today performance were mixed as Binance USD, Avalanche, Solana, Tether, XRP, Terra, Tron, Litecoin, ApeCoin, Polygon, Cardano, Stellar, Chainlinkprices were trading with cuts over the last 24 hours, whereas Uniswap, Polkadot gained.
Parth Chaturvedi, Crypto Ecosystem Lead, CoinSwitch said “It was a highly volatile week for crypto markets a series of seismic events led to the collapse of the second largest global crypto exchange, FTX. Combined with the continuing deterioration of the global macro economic conditions, signalled by the massive Tech lay-offs, the crisis at FTX triggered extreme churn in the crypto markets.”
“It all began last Wednesday when a CoinDesk article exposed that Alameda Research (SBF’s Prop Trading firm) was using FTX’s native exchange token, FTT, as an asset for collateralised lending. There’s further speculation that user funds on FTX were used for risky strategies by Alameda. This made Binance CEO Changpeng Zhao (CZ) announce that they will sell their $2.1bn in FTT tokens, which resulted in a “bank run” on FTX as users started withdrawing funds. The drama reached a crescendo when CZ announced on Twitter that Binance would acquire FTX, but a day later, after Due Diligence, decided to walk back on the transaction,” said Parth Chaturvedi.
“As it stands, FTX’s liquidity crunch remains unresolved, raising concerns of a spillover into the broader market. Crypto M.Cap has crashed over $200bn over the last 5 days and is now below $900bn. BTC has tumbled 15% over the week and is struggling at $17k, while ETH is at $1.2k down 19% over the week. However the highest drawdown’s were in tokens at the centre of the drama: FTT and Alameda backed SOL! FTX’s exchange token FTT has crashed ~90% in the last 7 days, while much bigger in M.Cap. SOL has tumbled 50% in the same time frame; cumulatively wiping out more than $10bn in M.Cap amongst these two tokens. Speculation is high that there will be regulatory scrutiny of FTX, Alameda and SBF in the coming days, while the overall market will continue to remain turbulent,” said Parth Chaturvedi.
Cryptocurrency exchange FTX sought bankruptcy protection after the exchange experienced the crypto equivalent of a bank run. FTX, the hedge fund Alameda Research, and dozens of other affiliated companies filed a bankruptcy petition in Delaware, reported Bloomberg.
CEO and founder Sam Bankman-Fried has resigned, the company said. Bankman-Fried was recently estimated to be worth $23 billion and has been a prominent political donor to Democrats. His net worth has all but evaporated, according to Forbes and Bloomberg, which closely track the net worth of the world’s richest people.
The crypto world had hoped that Binance, the world’s largest crypto exchange, might be able to rescue FTX and its depositors. However, after Binance took a look at FTX’s books, it concluded that the smaller exchange’s problems were too big to solve and backed out of the deal.
FTX is the latest cryptocurrency company this year to come under financial pressure as crypto assets have collapsed in value. Other failures include Celsius, a bank-like company that took in crypto deposits in exchange for yield, as well as an Asia-based hedge fund known as Three Arrows Capital.
(With inputs from agencies)
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