News hardware Cryptocurrencies: two cryptocurrency giants go to war and bring down Bitcoin and the rest of the market
From around 3:00 (French time), the cryptocurrency called FTT has triggered a spectacular drop in its price. At the same time, the rest of the market followed the fall of cryptocurrencies, including Bitcoin. Yet, at 29th place in the ranking, why does this cryptocurrency impact the entire market today?
FTT the cryptocurrency of the FTX cryptographic platform
So unknown to the general public prior to this event, the FTT cryptocurrency managed to make a name for itself outside the crypto ecosystem, but not for the right reasons …
Launched on May 8, 2019, FTT is the native crypto token of the third largest crypto trading platform, FTX. This token issued by the platform itself allows you to accumulate liquidity by offering benefits to users of the crypto platform, a recurring practice for almost all cryptocurrency trading applications.
While the token yesterday was around € 22, it is now around € 15 and does not seem to stop in its fall. This spectacular drop of over 30% even manages to shake the pillars of the sector, namely Bitcoin and Ethereum.
Why does FTT drag all other cryptocurrencies with it?
This critical situation is explained by a rumor of insolvency on the part of the trading company Alameda Research. This wealth manager is owned by Sam Bankman Fried, the founder of the FTX platform and its FTT token.
Specifically, according to information published by the crypto media Coindesk, the equity of Alameda Research is mainly based on the crypto FTT, from the FTX platform. If at first glance the news does not seem so terrible, in reality it is a real problem, especially in the height of the crypto winter.
In fact, in the event of a fall in the FTT price (which is not impossible for the context), the company could quickly become insolvent. Furthermore, its strong proximity to FTX could also cause the platform to be lost, and therefore all users would end up on the straw. A little reassuring sign when you know that FTX is currently the third largest platform in terms of cryptocurrency volume.
Despite a flash denial by Alameda and the FTX boss, the consequences are already being felt in the sector …
Is Binance Taking Advantage of This to Attack Cryptocurrency Competition (FTX)?
Following his suspicions, Binance, the leading cryptocurrency exchange, has announced the sale of all FTT tokens in its possession, worth approximately $ 2.1 billion. These tokens come from a Binance investment dating back to 2019.
After the first sale of part of the tokens (20 million FFT, or 530 million dollars), prices immediately dropped by 14%. Although Binance has said it wants to sell these tokens for several months to avoid causing a crash, the news alone has served to get all their FTTs to download.
Since then, the FTT has continued to decline, dragging the rest of the market into the abyss. Indeed, the intertwining of interests is reminiscent of the unfortunate events of Terra Luna. Going from more than € 100 to € 0 following a “glitch” with its UST token, the cryptocurrency had created a cataclysm on the cryptocurrency market. Last May, all the companies linked to the Terra Luna cryptocurrency had collapsed one after another, such as Celsius, 3AC capital or even Voyager Digital.
Hence, many investors fear that they will relive a similar scenario, but this time with the FTT token.
Others believe the two platforms have returned to war. The two, in fact, are head to head in the ranking of the most used crypto platforms and testify to the same ambitions (stable token, acquisition of banks, etc.)
However, Changpeng Zhao, the Binance boss wanted to deny:
“Binance always encourages collaboration between industry players. As for any speculation that this is a move against a competitor, it is not. Our industry is in its infancy and every time a project publicly fails, it hurts every user and every platform. “
Binance always encourages collaboration between industry players. As for any speculation that this is a move against a competitor, it is not. Our industry is in its infancy and every time a project publicly fails it hurts every user and every platform. 3/4
– CZ 🔶 Binance (@cz_binance) November 6, 2022
To which the FTX boss replied:
“A competitor is trying to sue us with false rumors. FTX is fine. The assets are good “
1) A competitor is trying to chase us with false rumors.
FTX is fine. Goods are fine.
– SBF (@SBF_FTX) November 7, 2022
In this sense, the war between the two competitors does not seem like a good idea for either of them, given that with the blow of billions the two giants could cause yet another crash, bringing to a minimum Bitcoin and other cryptocurrencies.