- The crypto markets crashed by $88 billion after a quickfire drop
- The crash seems to have been sparked by massive sells of the FTT token
- Such action is thought to be a result of the war of words between Binance and FTX CEOs
$88 billion was temporarily wiped off the crypto markets overnight as the war of words between Binance and Alameda Research turned physical. Bitcoin dropped to $19,360 in the quickfire market shock, but the greatest damage was done to Alameda and its associated company FTX, whose FTT token fell from $23 to $15 under selling pressure not seen since the cycle top last year. Although there has been no confirmation at the time of writing, it is heavily suspected that Binance selling its FTT holdings was behind the move, a day after CEO Changpeng Zhao said that the selling would be conducted carefully.
Cold War Goes Hot
The war of words that has been brewing between Zhao and FTX founder and CEO Sam Bankman-Fried escalated over the weekend when Zhao said that Binance was going to sell its entire FTT holding, thought to be in the hundreds of millions of dollars, after claims that Alameda’s balance sheet was mainly held in volatile FTT tokens.
Despite saying that he would do it carefully, the FTT market tanked overnight by around 35%, with selling volume not witnessed for a year and a half. This dragged the rest of the crypto market down with it, and led to fears that a capitulation could be on the cards.
FTX’s solvency has been the subject of much speculation since the weekend, and there were suggestions that the platform was not working properly, with withdrawals problematic and certain services stopped. However, FTX responded yesterday that “withdrawals were slow as we refill hot wallets but have been processing all day.”
FTX Margin Called?
There could be more trouble on the horizon for FTX however, with some suggesting it could get a rather large margin call:
$400 million evaporated in less than an hour.
The intervention is cracking. Either they continue draining reserves to prop it up, or Alameda + FTX will undoubtedly be facing margin calls on FTT-collateralized loans.
Let the fireworks commence 💥💥💥 pic.twitter.com/nvbs7Bnggz
— Joe Consorti ⚡ (@JoeConsorti) November 8, 2022
The activity, which seems certain to have been started by Binance, comes less than 24 hours after Bankman-Fried called out Zhao’s action yesterday, saying that, “A competitor is trying to go after us with false rumors” and trying to reassure users that “FTX is fine. Assets are fine.”
Of course, this will only be known for sure when the dust settles and the crypto world is able to see what’s left of the fallout.