‘Mass Panic’ Triggers $1 Trillion Cryptocurrency Crash and ‘Short Squeeze’ Warning as FTX’s FTT Freefalls – Dragging Down Bitcoin, Ethereum, BNB, XRP, Solana, Cardano and Dogecoin
Bitcoin, ethereum and other major cryptocurrencies have plunged this week, wiping billions of dollars from the combined crypto market and sending it below the closely watched $1 trillion mark.
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Bitcoin price has crashed below $20,000 per bitcoin, down 6% in the last 24 hours, while the price of ethereum and other top ten cryptocurrencies BNB
Now crypto exchange FTX, led by billionaire Sam Bankman-Fried, has stopped processing withdrawals, according to reports – sparking “mass panic” after a rival exchange boss issued a stark warning.
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Fears of FTX’s FTT have caused the bitcoin price to crash below $20,000 per bitcoin, weighing … [+]
“Mass panic over FTX’s solvency has caused investors to quickly pull their assets from the platform, which FTX has clearly struggled to manage,” Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, wrote in an email.
The block has reported that FTX stopped processing withdrawal requests, around 6 a.m. ET, citing ethereum blockchain data. FTX did not immediately return a request for comment.
Over the weekend, Binance CEO Changpeng “CZ” Zhao sent shockwaves through the bitcoin and crypto community when he announced that Binance was liquidating its holdings of FTX’s cryptocurrency FTT, a rival to Binance’s own much larger BNB, citing “recent revelations” about FTX and Bankman-Fried’s trading company Alameda Research.
“Whether these are just short-term liquidity issues due to the speed of withdrawals, or a more fundamental issue, remains to be seen,” Sotiriou added. “However, the silence from FTX CEO Sam Bankman-Fried is deafening and causing further fear. FTX’s token FTT is down 30% to $15 at the time of writing, but an announcement from FTX could result in a short squeeze”—where bets against an asset fails and results in a sudden price increase.
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The price of FTX’s FTT has fallen by almost 50% in the last week, raising fears about the situation … [+]
The drama between FTX and Binance has worried the bitcoin and crypto community, who fear the clash will spill over into the broader market, as the collapse of hedge fund Three Arrows Capital did earlier this year in the wake of the second terra luna meltdown.
“Fears of contagion from the public spat between Binance and FTX have gripped the cryptocurrency market, resulting in aggressive selling of FTX’s token, FTT, as well as solana
“FTX and Alameda both sought to calm fears of another Three Arrows event after Binance CEO CZ announced he would be liquidating his FTT position. This continues to unnerve traders in an area so driven by sentiment.”
Solana, an ethereum rival that rocketed higher last year, has seen an outsized crash this week due to FTX’s large solana holdings that some believe the exchange may be forced to sell.
“Solana’s SOL token is currently taking one of the biggest hits because FTX is a big supporter of the tier one blockchain and has significant amounts of SOL on its balance sheet that it may have to sell to prop itself up in the current bank run,” Marius Ciubotariu, a core contributor to Solana-based Hubble Protocol and Kamino Finance, said via email. “If that happens, it could be bad news for the SOL token and possibly the industry at large.”
