FTX Collapse Caused Crypto Market To Shed Over $100 Billion In 24 Hours
Major cryptocurrencies are down with some depreciating in value more than 10% in the past 24 hours.
Just days earlier, Binance CEO Changpeng Zhao announced that FTX asked for help in dealing with the ongoing liquidity problem in the troubled exchange. This prompted a strong bearish response from the crypto market.
Almost immediately after Binance revealed that they might buy the Sam Bankman-Fried crypto exchange, cryptocurrency values dropped sharply. In general, the last day of trading saw a significant drop in the value of cryptocurrencies.
Based on figures from CoinMarketCap, the price decline wiped out more than $100 billion in value from crypto assets.
The overall market cap for cryptocurrencies dropped from $935 billion 24 hours ago to $823 billion at present, a loss of $112 billion.
As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of
— Binance (@binance) November 9, 2022
Binance, the largest cryptocurrency exchange in the world, abruptly stated on Wednesday that it would not be acquiring rival FTX.com due to reports of mismanaged customer cash and alleged government scrutiny.
Unsurprisingly, news of the Binance top boss’ U-turn sent the crypto market into a tailspin, affecting major cryptos like Bitcoin and Ethereum. Bitcoin is down to $16,721 while Ethereum fell to $1,187.
Image: Coincu News
FTX The Next Celsius?
FTX is one of the biggest crypto exchanges in the market, but following the death spiral of its native coin FTT, it is expected to become the next Celsius. Even Changpeng Zhao referenced this on his November 7 tweet announcing that his company would liquidate their FTT position.
After this, however, CZ announced that Binance would move to acquire the troubled exchange, only to have a change of heart after Binance conducted its due diligence – and found things that simply shocked the Chinese billionaire.
Binance CEO Changpeng Zhao and FTX CEO Sam Bankman-Fried (right). Image: Cryptoslate.
On its Twitter account, Binance said:
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX․com.”
The exchange added:
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.”
This means that the possible relief that customers have hoped for is all but gone and FTX, and Alameda Research, are now both on their own – treading on uncharted territory with the big possibility of bankruptcy.
According to recent reports, if the acquisition deal materialized it would have meant that Binance would have 80% of the market share in the crypto space.
Solana’s Ongoing Troubles
Meanwhile, FTT is not the only coin that is hurting, Solana’s native coin SOL followed the FTT slump as well. As of writing, SOL’s correlation coefficient with FTT stands at 0.92 which means that SOL is closely following FTT’s price movements.
This is because of Solana’s close partnership with FTX back in 2021. With sister company Alameda Research holding more than $900 million in SOL, it’ll be hard not to think that FTX will drag the supposed Ethereum-killer to the ground.
But even without Alameda’s $900 million bag, SOL would still hurt with just association with FTX. As of writing, SOL is experiencing a minor pull back, trading at the green at $15.707.
Crypto total market cap at $784 billion on the daily chart | Featured image from News Medical, Chart: TradingView.com