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FTX Leaves the Crypto Market
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The already doomed cryptocurrency market has experienced a significant decline following the collapse of the exchange FTX on November 8.
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According to data from CoinGecko, Ethereum has dropped 15% and Bitcoin has down 11.6%.
CoinGecko revealed that the firm’s net crypto asset holdings have dropped 83% in just the last two days, while FTX native token FTT has dropped 71.6%.
The overall market capitalization of all crypto assets has decreased by more than 11%, from $1.03 trillion to $915 billion, according to statistics from Coinmarketcap and Yahoo Finance.
The abrupt acquisition of FTX by Binance after months of hostilities between the two crypto exchanges served as the spark for the decline in the market for cryptocurrencies.
FTX
The biggest cryptocurrency exchange in the world, Binance, was the initial investor in FTX.
There is a huge liquidity constraint, and FTX called for our assistance this afternoon, according to a tweet from Changpeng Zhao, CEO of Binance (CZ), on Tuesday.
We intend to fully acquire http://FTX.com and help cover the liquidity shortage, and we signed a non-binding [letter of intent] to that effect, he continued. “We will be performing a comprehensive [due diligence] in the coming days.
Sam Bankman-Fried, CEO of FTX, had been acquiring struggling crypto companies up until recently due to a financial bottleneck brought on by the abrupt collapse of the cryptocurrencies Luna and UST or TerraUSD.
However, this left FTX with a liquidity crisis, which suggests the possibility of selling cryptocurrencies to raise money.
According to analysts, if the merger of the two cryptocurrency exchanges is successful, crypto businesses may confront even more intense competition at a time when trading volumes have significantly decreased.
According to data from cryptocurrency indexing platform Nomics, the total value of all cryptocurrency trades on all exchanges fell by 21% to $86 trillion in 2022. During that time, Binance controlled a 21.7% part of the total global crypto trading volume, while FTX maintained a 3.96% stake.
The spat between Binance and FTX has also put a strain on other competitor cryptocurrency exchanges. Shares of Coinbase Global closed Tuesday at $50.83, down 11% from the day’s high of $54.50.
Robinhood, in which Bankman-Fried owns a 7.6% interest, fell 19% on Tuesday, marking their biggest drop since August 2021.
In addition to eliminating Binance’s major rival, the merger may offer Binance a US presence that it does not currently have.
The merger may, however, take some time to complete because Bankman-Fried has been testifying before Congress and because Binance is apparently the subject of investigations by the US Securities and Exchange Commission and the UK’s Financial Conduct Authority.
On November 6, CZ sold $529 million worth of FTT in response to “recent revelations that came to light” before Binance made their acquisition of FTX official. He made no explanations for the selloff.
Following the incident, FTX saw its net crypto asset holdings plummet by 83%, contributing to an overall decrease in the company’s stablecoin reserve.
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