The week’s rout in cryptocurrencies deepened, with Bitcoin tumbling to the lowest levels in two years, as Binance walked away from its planned takeover of FTX.com.
Bitcoin, the largest token by market value, fell as much as 15% to $15,987 on Wednesday, the least since November 2020. That brings the two-day decline to as much as 23%, the most since June. It reached a record high of almost $69,000 a year ago. Just about every digital coin was struggling: Ether, Solana, Polkadot and Avalanche all dropped.
FTT, the utility token of the FTX exchange, collapsed by more than 40%, following a more-than-70% tumble on Tuesday.
“The market is now in full fear mode,” said Ilan Solot, co‑head of digital assets at Marex Solutions. “Everyone’s looking to see if there’s more dominoes and what else needs to be liquidated.”
As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com, a Binance spokesperson said.
Binance Chief Executive Officer Changpeng “CZ” Zhao had stunned the crypto world on Tuesday with an announcement that his firm was moving to take over FTX.com, which suffered a liquidity crunch after Zhao announced that he was selling a $530 million holding of FTX’s native token.
Investors are on edge about spreading contagion given the pivotal role FTX and its co-founder Sam Bankman-Fried played in the industry.
“Since I entered the crypto industry in 2016, very few periods tested its market infrastructure and participants like the last 24 hours did,” said crypto hedge-fund manager Dan Liebau of Modular Asset Management.
Noelle Acheson, author of the “Crypto is Macro Now” newsletter, pointed out that Bitcoin, which typically holds up better than other tokens during times of stress, was seeing greater declines than some other altcoins. That potentially points to institutional investors bailing “as a result of the drama.”
“It’s a sign that this is a blow to confidence in the industry as a whole, from the investor’s point of view,” she said in an interview. “From the industry’s point of view, it’s also a pretty steep blow, much more so than what we saw with Three Arrows Capital and with the Terra implosion. This is sitting harder.”
The sense of dread that swept across clients of fallen crypto exchange FTX.com was so intense that they pulled out $430 million worth of Bitcoin in the space of just four days. FTX had more than 20,000 Bitcoins going into Sunday, according to data from CryptoQuant. That fell to almost zero by Wednesday after fears about FTX.com’s financial health led customers to flee.
FTT, the utility token of the FTX exchange, has collapsed by more than 75% in the past 24 hours and was trading around $4.20, according to CoinGecko data.
The offer by Zhao’s Binance Holdings had came after a bitter feud between with Bankman-Fried spilled into the open. Zhao actively undermined confidence in FTX’s finances, helping spark an exodus of users from the three-year-old FTX.com exchange.
A day before reaching a deal, Bankman-Fried said on Twitter that assets on FTX were “fine.”