It has been a topsy-turvy ride for FTX. First, Binance announced the acquisition of FTX on November 9, 2022, only to pull out later. Since then, the value of Bitcoin fell more than 10% to $16,000 (Rs 14 lakh), its lowest level since November 2020. Furthermore, the value of altcoins such as Dogecoin, Cardano, Solana, and XRP also declined by more than 10%. “The FTX collapse has wiped out over $180 billion from the crypto market as digital assets across the board are under tremendous pressure. Ethereum is trading at $1,170.12 – this is a drop of over 10% in the last 24 hours. Historical data shows that Ethereum follows Bitcoin’s trajectory,” Shivam Thakral, CEO of BuyUcoin, a crypto exchange company told FE Blockchain.
It should also be noted that the overall market capitalisation has fallen below $1 trillion thereby hitting below $900 billion market for the first time since, 2021. As per industry experts, the downfall of FTX can cause its volume to dry up. “Users who are in the business of lending and borrowing of FTT will go through liquidity crisis due to loss of funds. All this is because of the FTX-Binance drama,” Punit Agarwal, founder, KoinX, a cryptocurrency exchange, said.
Changpeng Zhao, co-founder and CEO, Binance on the collapse of the deal said, “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.”
As of November 13, 2022, Bitcoin (at the time of writing this report), traded at $16,869 (Rs 14 lakh). Ethereum fell nearly seven percent in a single day and traded below $1200. (Rs one lakh). According to Rajagopal Menon, vice president, WazirX, a crypto exchange company, this is a worrying development for the industry. “The general feeling was that we had hit bottom, and the only way was up. Things could get a lot worse in terms of volatility before they get better. In the long run, there will be a push for more transparency in the form of proof of reserves,” he added.
Meanwhile, other cryptocurrencies have also declined significantly and posted double-digit losses, including Dogecoin, Ripple, Solana, and Cardano. FTT, the native token of FTX, fell nearly 75% in a single day. “Any crypto asset company which has leveraged its own balance sheet should be on the back foot. If your customer assets are not covered, or even better, overly collateralised, you’re one rumour away from a slump sale,” Nikhil Kurhe, founder and CEO, Finarkein Analytics, a data analytics platform, warned.
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