Bitcoin, Ethereum, and most of the cryptocurrencies are witnessing a brutal sell-off following wild price gyrations today. Fears over a withdrawal run from Sam Bankman-Fried’s FTX cryptocurrency exchange sent the crypto market into a fresh tailspin on Tuesday.
The selloff triggered eery recollections of the crypto market’s dizzying crash earlier this year, punctuated by the failures of the Terra blockchain’s UST stablecoin, Celsius, Voyager, and Three Arrows Capital.
Several altcoins were recording losses in the magnitude of 15% to 30%. Ethereum was down 18% while Bitcoin was down 12% after setting new yearly lows at $17,500. Both Solana and Dogecoin were down 25%, and likewise, Ethereum POW was down by the same magnitude. XRP and Shiba Inu were down 16%.
As of press time, FTT was down nearly 74.88% over the past 24 hours and 78% over the past seven days, to a price of $5.66. Interestingly, FTT is up 28% in the last hour, as are a few altcoins, as investors bought the dip.
Bitcoin, Ethereum, and the wider crypto market have struggled since the weekend, ahead of two major events: the U.S. midterm election and the U.S. Bureau of Labor Statistics consumer price index (CPI) releasing data Thursday that will provide the latest figures on inflation in the U.S. economy.
News has dropped that Binance, the world’s biggest digital asset exchange, was buying its primary competitor, FTX, following a public feud between the two CEOs of the companies.
According to Semafor, in the hours before FTX secured a rescue from Binance, it sought a bailout of more than $1 billion from Silicon Valley and Wall Street billionaires. By midday Tuesday, the hole appeared far deeper – closer to $5 billion to $6 billion.
Reuters reported that FTX CEO, Sam Bankman Fried (SBF) wrote in a message to staff sent on Tuesday morning, “In the last 72 hours, we’ve had roughly $6 billion of net withdrawals from FTX.” Withdrawals at FTX are “effectively paused,” he wrote, adding that that would be resolved in “the near future.”
Then Binance CEO, Chapeng Zhao tweeted:’’This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX and help cover the liquidity crunch. We will be conducting a full DD in the coming days’’.
‘’There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real-time. Binance has the discretion to pull out from the deal at any time. We expect FTT to be highly volatile in the coming days as things develop’’.
SBF gives his reason for the acquisition: “Our teams are working on clearing out the withdrawal backlog as is.” This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle, etc.; we apologize for that”.
Wu Blockchain reports that anti-monopoly laws may prevent Binance from acquiring FTX. The European Commission can impose turnover fines of up to 10% on larger deals if they are not approved by authorities. The U.S. CFTC also said it was monitoring the situation’’.
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