December 6, 2022

Bitcoin Crashes As FTX Contact With Binance Fails

The price of Bitcoin is now below $17,000—the first time that the asset has dropped that low since November 2020.

The Reason For All Of The Noise Surrounding Bitcoin

It’s been a volatile week for crypto assets, as the market reacts to a heavy news. The news goes that one of the biggest exchanges on the planet, FTX, was apparently insolvent. 

Binance, the world’s biggest digital asset exchange by volume, made an  announcement yesterday. The announcement was that it had agreed to acquire FTX in what would amount to a bailout. A bailout for the company founded by Sam Bankman-Fried.

The markets have swung wildly in the hours since. Bitcoin today has traded for nearly $18,000 but is now firmly below the $17,000 mark, according to CoinGecko. The coin is currently trading for just $16,700. That’s a 17% dip over the last seven days. 

The asset’s price is now 75% lower than its all-time high of $69,044 that it touched in November 2021.

Every other coin and token is in trouble, too. Ethereum, the second largest cryptocurrency by market cap, is worse off than Bitcoin, having dropped 16% in 24 hours. Ethereum is now priced at just above $1,100.

Other Cryptocurrencies Taking A Hit

And most other cryptocurrencies are in the red. In the past day, the worst performing are FTX’s native token, FTT, and Solana (SOL). Both of which have now fallen to sixteenth on the list of most valuable cryptocurrencies by market cap. Solana stood in the top five for most of the latter half of 2021. Sadly, it had remained in the top 10 until earlier this week.

FTT has dropped 62% in 24 hours and is worth $3.44. On the other hand, SOL is currently priced at $14—40% lower than it was 24 hours ago. 

Furthermore, apart from the crypto news, the digital asset market has other macroeconomic issues to factor in. Some of these factors include, the U.S. Bureau of Labor Statistics consumer price index (CPI) drops data tomorrow. In addition to the two above is the showing of the latest figures on inflation in the American economy.

The last time hot inflation figures were revealed, the price of Bitcoin dipped along with the stock market. U.S. equities were down at the time of writing as investors make sense of the midterm elections and which party will control Congress next week as results continue to dribble in.

Solana’s Troubles As It Relates To Bitcoin Crash Saga

Among the major cryptocurrencies, Solana (SOL), the native token of the eponymous blockchain network, is the worst hit. It plunged to a 20-month low of $12.80 on Wednesday before climbing up to $13.87 by press time.

This is still a massive 25% drop in value over the past day and a 55% slip over the week. One  which eventually saw SOL slip in the rankings as the asset’s market cap shrank from above $13.5 billion. Sadly, It is now just under $5 billion today.

The Solana project, among other investors, is backed by Alameda Research. This is the crypto trading firm that, like FTX, was founded by Bankman-Fried.

Certainly, such close proximity to the FTX chief is probably the reasons there’s been so much selling pressure on SOL.

To add to the woes, Crypto.com on Wednesday halted all deposits and withdrawals for Tether’s USDT. They also did the same for Circle’s USDC issued on the Solana blockchain.

Augustine Ojeh

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