FTX Deal Sends Bitcoin Below $20,000

The crypto market is still suffering from the Terra and Celsius cases, in a market context already during the winter. Now, it is the difficulties of the FTX exchange that has consequences for the entire crypto market, starting with Bitcoin. Early this morning, the price of Bitcoin fell back below $20,000.

After Terra and Celsius … Now the FTX “business”?

In 2022, the crypto market was marked in particular by two cases that made headlines: the collapse of the Terra ecosystem and the bankruptcy of the Celsius platform. From now on, the FTX exchange will become the center of all attention and fear.

It all started a few days ago when a report by CoinDesk disturbed publication. The information applies two companies created by Sam Bankman-Fried : the Alameda trading company, and the FTX exchange platform.

According to this report, as of June 30, more than 35% of Alameda’s balance sheet consisted of FTT tokens, the token of the FTX platform. This revelation put the the question solvency of the FTX platform and worried investors, starting with Binance. In fact, on November 6, 2022, the Binance boss revealed that he wanted to get rid of his FTT tokens.

As part of Binance’s exit from FTX equity last year, Binance received approximately $2.1 billion USD in cash (BUSD and FTT). Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books. 1/4

— CZ 🔶 Binance (@cz_binance) November 6, 2022

Some analysts are concerned about the source of liquidity from the FTX platform. Generally, exchanges keep their funds on a cold wallet. The FTX exchange, meanwhile, would draw its liquidity from other exchanges.

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The fall in the price of the FTT token

Until yesterday, November 7, the token price was hanging and showed only a small sign of weakness. The price was kept around the value key to $22. Why “key value”? Because that is the purchase price offered by Caroline Ellison, CEO of Alameda, to CZ, the manager of Binance.

@cz_binance if you’re looking to minimize the market impact on your FTT sales, Alameda will be happy to buy it from you today for $22!

— Caroline (@carolinecapital) November 6, 2022

But the situation went much worse that night. Shortly before 4am, the price of the FTX token fell and crossed the $22 mark. It therefore went from $21.96 at 3:45 am to $18.89 at 3:55 am, a drop of 14% in just 10 minutes !

The price then continued to fall to $15.4 before returning to the current price of around $18. So is the price of the FTT they lost 20% in the last 24 hoursand more than 31% in the last 7 days.

The consequences for the price of Bitcoin and the entire crypto market

The consequences of FTT’s collapse were not long in coming. Almost at the same time, the price of Bitcoin fell. BTC price has indeed gone from $20,657 at 3:50 am to $19,485 at 6:30 am, crossing the symbolic threshold of $20,000. Therefore there is Bitcoin it lost 5.7% of its value in less than three hours.

The second crypto in the world, Ethereum, also felt the shock wave. Over the same period, the price of ETH it lost 8% and went below $1500. Likewise, Dogecoin and Solana suffered heavy losses this morning.

In fact, the slap spreads across the entire crypto market. Therefore, the the total capitalization of the crypto market also fell below a symbolic bar. It’s worth it now less than 1000 billion dollars.

So a burning question remains: can Alameda and Sam Bankman-Fried prove the financial health of the FTX ecosystem and reassure investors?