Bitcoin’s price has dropped below the critical $20,000 level in the last several hours. The fall happened about 12:00 p.m. EST, and it raised questions about whether the cryptocurrency industry is at risk of another Celsius/Terra Luna tragedy.
The Bitcoin market seems to have reacted by selling off its riskier holdings. Coinglass, an analytics firm, reports that in the previous hour alone, holders of $112.83 million worth of cryptocurrencies sold out 9 percent of their long holdings.
Anxiety over a Bitcoin epidemic as a result of the feud between FTX and Binance
As a result of the disagreement between two of the crypto industry’s wealthiest exchange leaders, investor confidence is low. The price of FTT tokens was under extreme pressure when Binance CEO Changpeng Zhao (“CZ”) revealed that the exchange would be selling its massive stack of FTT tokens.
Despite the FTT token’s prominence in the FTX exchange’s financials, speculation is increasing that Sam Bankman-cryptocurrency Fried’s trading platform is on the brink of collapse, as was revealed in a recent article.
As Bitcoin researcher Dylan LeClair pointed out, FTX is burning up its stablecoin reserves nearly as quickly as restocking them.
I have a horrifying thought that the Alameda counterparty for the leveraged FTT exposure could be the solvency of FTX itself.
As $22 FTT fell, ~400k worth of FTT open interest was eviscerated.
Who else is capitulating with size at exactly that level except Alameda? pic.twitter.com/JN1340HGhb
— Dylan LeClair 🟠 (@DylanLeClair_) November 8, 2022
The decline of the FTT token below the crucial $22 barrier may have significantly affected the Bitcoin market. After FTT’s price had been at $22 for some time, it suddenly plummeted to as low as $15.03.
Caroline Ellison, CEO of Alameda, said yesterday that her organization would be pleased to purchase the token from CZ for $22. With the loss of such a landmark, LeClair speculated that FTX could finally be on the verge of collapse.
However, the failure of the FTT token is only one of many warning signs. For instance, there have been reports of FTX not processing withdrawals or significantly slowing their processing.
withdrawals from ftx not going through…been an hour. will update
— degentrading (@hodlKRYPTONITE) November 8, 2022