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Panic Sell Hits The Crypto Market: The Market In A Literal Blood Bath?

If you’ve closely followed the crypto market, you know it’s a blood bath out there. This past week alone has been filled with many incidents that site the possible crash of the market. Adding to it, the market has been down in the slumps since December 2021, and there has been no remarkable recovery since then. 

While volatility is an accepted factor in the market, things don’t seem to be booming for 2022. Instead, the notable trend is that a few things only worsen. But what are these events which have caused havoc in the market?

Continue reading as we unfold the latest news events in the following sections of our weblog.

November 1st Week: Major Incidents To Have Shook The Crypto Market

The Market Took A Dip Below The Trillion

Many major cryptocurrencies, including prominent names such as Bitcoin and Ethereum, lost a significant portion of their value. As a result, the market lost billions of dollars, bringing the total crypto market cap below the $1 trillion mark after a long time.   

Bitcoin lost 6% of its valuation in the past 24 hours, bringing its prices down to less than $20000. Besides that, other cryptos such as Ethereum, Solana, Cardano, and Dogecoin are losing much of their valuation.  

FTX Fried By 96%

Another critical factor in this play is FTX’s latest events. The exchange has taken a severe blow in terms of its valuation. With the billionaire Sam Bankman Fried on the steering wheel of the firm, FTX is making headlines but for the wrong reasons. The exchange has stopped processing withdrawals which triggered a mass panic among traders and investors. 

Now, like with every other crypto exchange, even FTX has its native token, FTT. A chief executive from FTX’s exchange issued a stark warning, resulting in FTT losing 30% of its value. 

All these factors have triggered a panic reaction, and people are now eager to withdraw their funds from the FTX platform. To put more fuel to the flame, FTX needs to deal better with the entire situation, with them stopping withdrawal processing. 

‘Panic Sell + Low Confidence = Company Takeover’

Reports confirm that FTX stopped withdrawal processing requests at about 6 PM ET. Besides, there has not received any formal comment from FTX giving any assurance to its traders and investors.       

But the story does not end here as an announcement from Changpeng Zhao, the chief executive from Binance, sent a shockwave through the crypto and Bitcoin community. The announcement stated that Binance would be liquidating its holdings of all FTT, a prominent competitor of Binance’s native currency BNB. 

Binance Undertakes FTX?

While it’s still unclear, Zhao did not cite any specific reason justifying the action for the “recent revelations’ ‘Almeda Research is a trading company of FTX and Bankman-Fried. This came after a report from Coinbase revealed that the balance sheet of Almeda Research is packed with FTT making it very illiquid. 

However, there is no confirmation whether this is a short-term liquidity issue triggered by the speed of withdrawals or a more fundamental issue. But that does not matter since the FTX CEO has remained silent throughout this ordeal, which only fueled more panic among people. 

FTX: Current Market Update

At the time of writing this, FTX has lost about 95.8% of its value in just 24 hours, bringing its price down to a new low of $4.97. But hopefully, this will change now since the FTX CEO has recently taken to the microblogging site Twitter to ensure FTX and its assets are “fine.” Unfortunately, “fine” is not the affirmation investors, and traders were looking for in this case, which further fueled the panic. 

Binance Vs. FTX: When Two Giants Lock Horns!

With so much already going on in the market, Binance and FTX are more or less preoccupied with their drama. Understandably, the Bitcoin and crypto community is not very happy with everything going on at the moment. Most people fear this clash will result in spillover across the exhaustive market. 

People’s fears are justifiable since they witnessed something similar with the collapse of the hedge fund Three Arrows Capital earlier this year. The said collapse further resulted in a widespread aftermath contributing to the meltdown of terra Luna.        

According to a prominent crypto market analyst, the spat between the crypto giants Binance and FTX has taken the entire crypto market to its grips. This resulted in a mass hysteria triggering large scale sell of FTT crypto, FTX’s native currency. Besides that, it also triggered the Solana sell-off, one of the most significant holders in Almeda Research, FTX’s principal trading company. 

Solana is one of the most prominent rivals of Ethereum, which performed well in the market last year. However, since Solana is a major holder in Almeda Research, many now think that the exchange might have no option but to rely on forced sell-off. If these presumptions turn true, it can easily become bad news for Solana and the entire crypto market.      

Is Binance Buying FTX?

The term drama best depicts the sweet and sour relationship between Binance and FTX. This became evident after reports started to surface claiming that Binance is now buying FTX following the liquid crunch. Binance confirmed the same, suggesting that it has signed a letter of intent to acquire its rival FTX.  

This is not something the crypto community would have hoped for following the public spat between both billionaires. However, according to Zhao, this move came since the interest of crypto users was at stake following the liquidity crunch of FTX.

It is worth noting that Binance, the largest crypto exchange, was one of the first investors in the three-year-old FTX exchange. But as FTX began to garner more popularity among the crypto community, the relationship between both giants started sour. 

Is The End For FTX Near?

While there has not been any disclosure of the finances associated with the deal, things will likely not be perfect for FTX investors. After all, FTX was valued at $32 billion in a financial round conducted earlier this year.     

Bankman-Fried offered a huge thanks to Binance for the entire deal. He further stated that this is a user-centric deal that will benefit almost everyone in the industry. Bankman-Fried further ensured that this deal would clear out all the liquidity complications, and all assets would then be covered 1:1. 

Lastly, he apologized to the FTX community, as settling this entire thing might require some time to overcome this colossal event. 

With all the events unfolding, what’s your take as an investor?

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