The cryptocurrency market has been in turmoil since news of liquidity problems emerged at the FTX exchange, a situation increasingly pointing to a historic bursting of the digital asset bubble. Binance, which previously agreed to buy FTX for bankruptcy, abruptly withdrew the deal Wednesday, exacerbating the crisis and plunging cryptocurrency prices. Bitcoin plunged to $ 15,682 on Wednesday, down about 8%, after losing 8% the day before. Ether also fell to $ 1,083, down about 4% on the last day.
The cryptocurrency market is in chaos again and the price of bitcoin has dropped more than 13% this week. The cause of this week’s earthquake disruption: FTX, the world’s fourth largest cryptocurrency exchange that was once a mainstay of the industry, crosses a serious crisis. Faced with a rapidly worsening liquidity crisis, FTX is looking for a solution to save the company and avoid bankruptcy. At the heart of the problem is the FTX platform’s native token, FTT, which has been visceral in a massive sell-off, plummeting more than 80% in the past few days.
The liquidity problems of FTX have had a contagious effect on the entire industry, with cryptocurrency investors fearing that another shockwave will hit them. Bitcoin is weathering the storm, but it has still lost more than 17% in the past five days. But the big “B” has been in the “green” for 24 hours, earning 3%. It plunged to $ 15,682 on Wednesday morning, down about 8%, after a previous 8% loss the day before. Analysts reported that the drop was much more difficult for altcoins, with ETH losing nearly 18% over the past five days.
Solana, a cryptocurrency backed by FTX CEO Sam Bankman-Fried, is also in free fall. Solana has lost just over 40% of its value in the past seven days. In the past 24 hours, FTT has lost 22%. The broader cryptocurrency market is also in deep red, down at least 20% in the past week. The total market capitalization of the cryptocurrency is now below $ 900 billion, a level last seen in late 2020. Experts predict that the market is heading for a potentially more severe slump.
In fact, FTX withdrawals began on Sunday morning, following a series of tweets from Binance CEO Changpeng Zhao. He revealed that his company would sell his holdings of FTT tokens, the native token of FTX, due to “revelations” about the company. Binance, which has also struggled economically in recent months, has announced it has 23 million FTT tokens worth around $ 529 million. But FTX CEO Bankman-Fried said Binance was “trying to chase FTX with false rumors”. Bankman-Fried insisted that “FTX’s assets are good”.
The revelations Zhao mentioned were most likely a reference to a report released by CoinDesk earlier this month. The report contained allegations about Bankman-Fried’s other venture, the trading company Alameda Research. FTX and Alameda are two separate companies. But the report cites a “private financial document” that claims that much of Alameda’s balance sheet was held in FTT tokens, issued by the exchange to offer users a discount on trading fees. This suggests that more than a third of Alameda’s $ 14.6 billion assets are held in a cryptocurrency created by FTX.
If this information is true, it means that FTX and Alameda are hardly independent of each other, but also that the two companies would have very fragile foundations. However, on Tuesday, Bankman-Fried apologized in a note to FTX staff for not being available. A report on the subject revealed that the company had recorded withdrawals on the order of $ 6 billion in the previous three days, orders of magnitude higher than the usual level. But Bankman-Fried didn’t stop there. On November 10, the FTX boss continued his apology in a series of tweets.
In the end, I was CEO, which meant * I * had to make sure everything was okay. * At the end of the day, I should have known everything. I have clearly failed in this area. I’m sorry, you wrote. Earlier this week, Zhao announced his company would potentially acquire FTX in an effort to salvage what’s left of the stock market. The announcement of the deal came about a week after FTX’s precarious situation became apparent. The conclusion of the agreement will lead to an unprecedented consolidation of the foreign exchange market and the sector in general.
Toutefois, si Binance se retire, cela pourrait sonner le glas de FTX – l’quivalent pour le secteur de l’effondrement soudain de la banque d’vestissement Bear Stearns en 2008, qui prfigurait la crise financire plus large qui a merg cette anne- L. And against all odds, it is this second scenario that has occurred. In fact, the decline in the entire cryptocurrency market got worse on Wednesday when Zhao decided to turn around. Zhao and his people announced that they have consulted the books of the rival stock exchange and that upon examination, Binance believes it is incapable of saving the platform.
“Following our due diligence review, as well as recent reports on poorly managed client funds and alleged US agency investigations, we have decided not to pursue the potential acquisition of FTX,” the company said in a tweet. Whether the cryptocurrency market crash will escalate to new market lows remains to be seen. In this case, the most important question would be what is the alternative solution to the FTX liquidity crisis. Furthermore, the exchange could come to the attention of regulators given the magnitude of the impact.
The US SEC is already investigating the relationship between the US arm of FTX and Alameda Research. Regulators are reportedly reviewing how FTX manages user resources. The situation could also reinforce growing demands to regulate the cryptocurrency industry in the United States, Europe and other parts of the world. Amid the market turmoil, Senator Cynthia Lummis (R-Wyo), who co-sponsored a bipartisan bill on the subject, released a statement on Tuesday stressing the need for clear rules when it comes to digital assets.
Also, the cryptocurrency market you faced multiple crises over the course of 2022, not to mention funding tensions, due to rising interest rates and a wider market downturn that has seen investors shy away from riskier digital assets. FTX’s liquidity problems come in the wake of the TerraUSD stablecoin fiasco, the digital asset hedge fund debacle Three Arrows Capital, and the recent bankruptcy of lender Celsius Network which operated on this market. this all adds up to the collapse of the non-fungible token market (NFT).
Digital assets have cost investors hundreds of billions of dollars this year. Galaxy Digital, a blockchain company, reported in September that the most profitable NFT projects are deceptive and offer complicated property licenses, with buyers unaware of their intellectual property rights. The company explains that only one of the 25 NFT projects analyzed in the study attempted to offer buyers direct intellectual property rights to the main art or content. This supports claims that NFTs are a scam.
At the end of September, global NFT market statistics revealed that NFT trading throughout the month returned to pre-bubble levels, with monthly volume down 97% from its January peak. Data from Dune Analytics indicates that it fell from $ 17 billion in early 2022 to just $ 466 million in September, the lowest level in 15 months. The decline of the NFT market registers part of a larger $ 2 trillion loss in the industry.
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What is your opinion on the subject?
What do you think of the sharp drop in cryptocurrency prices?
Do you think the market will recover? Will FTX be able to avoid bankruptcy?
What do you think of the drop in the price of bitcoin? Will he be able to reach the end-2021 high of $ 68,000 again?