The shocking failure of cryptocurrency exchange FTX last week continues to hang over Bitcoin and other digital assets, with cryptos vulnerable to even further declines after already breaching key technical price levels.
The price of Bitcoin was rising slightly over the past 24 hours to $16,800. The largest cryptocurrency was changing hands near $21,000 just over a week ago, before concerns around FTX began in earnest, but has recovered from lows near $15,500 reached in the trough of last week’s panic selling.
The in-house token of the largest cryptocurrency exchange FTX dropped by more than 75% on Tuesday as investors were alarmed by rumors of pressure on FTX’s financials.
By market value, Bitcoin, the most valuable cryptocurrency, had dropped to $15,500, its lowest level in two weeks, and was on track to have its worst day since mid-September. The next biggest asset, Ether, also declined to almost $1,235.
FTX is under pressure after Changpeng Zhao, CEO of the largest cryptocurrency exchange in the world and a rival, Binance, announced on Sunday that his company would sell all of its holdings in the FTX token as a result of “recent findings” that were not defined.
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Sam Bankman-Fried, the founder of FTX, declared that the exchange was “great” and that any worries were “fake rumors.”
The FTX coin, which offers holders rebates on FTX transaction fees, had just dropped to about $2.5, its lowest level since early 2021.
Statistics from research company Nansen showed a one-day net outflow of around $630 million from FTX, indicating that account holders were also withdrawing their funds.
There are “huge withdrawals out of FTX, across numerous assets,” according to Justin d’Anethan institutional, sales director at digital asset company Amber Group. “FTT is moving south, below a significant support level.”
It appears that investors are liquidating their holdings or withdrawing their money; this week is likely to be chaotic.
Following a revelation from news website CoinDesk regarding a leaked balance sheet from Alameda Research, a trading firm created by Bankman-Fried that has tight ties to FTX, cryptocurrency enthusiasts had queries about FTX’s token on Twitter last week.
The chief operating officer of Singapore-based cryptocurrency investment management Stack Funds, Matthew Dibb, stated that “on-chain analytics show hundreds of millions being removed from FTX during the previous day.”
The subject of FTX’s solvency has been brought up in light of recent occurrences this year. However, we haven’t yet come across any concrete evidence to support this point of view.
