Why Is Bitcoin Down Today? – Forbes Advisor

Crypto markets are once again in turmoil, with the price of Bitcoin (BTC) falling more than 13% this week.

The cause of this week’s seismic disruption: FTX, the world’s fourth-largest crypto exchange, which used to be an industry stalwart.

Faced with a rapidly worsening liquidity crisis, FTX is looking for a solution to save the business. At the heart of the issue is FTX’s native token, FTT, which has been delisted in a major selloff, plunging more than 80% in recent days.

FTX’s liquidity woes have spread contagion across the sector, as crypto investors fear another shoe will drop. Bitcoin (BTC) is weathering the storm, but is still down more than 17% over the past five days. But the big “B” has been in the “green” for the past 24 hours, gaining 3%.

The decline has been much tougher for altcoins, with Ethereum (ETH) down nearly 18% over the past five days. Solana (SOL), a crypto backed by FTX CEO Sam Bankman-Fried, is in complete freefall, having lost more than 40% of its value in the past seven days. In the last 24 hours, FTT has dropped 22%.

The problem with FTX and Alameda

Withdrawals from FTX began on Sunday morning thanks to a series of tweets from Binance CEO Changpeng Zhao, who revealed that his company would be selling its holdings of FTX’s native token due to “revelations” regarding the company.

Bankman-Fried responded to Zhao’s tweets, stating that Binance is “trying to go after us with false rumors.” Bankman-Fried insisted that FTX’s “assets are fine.”

The revelations cited by Zhao were most likely a reference to a CoinDesk article published earlier in November that made allegations regarding Bankman-Fried’s other business, trading firm Alameda Research.

FTX and Alameda are separate businesses. The CoinDesk report claimed it had seen a “private financial document” that suggested much of Alameda’s balance was held in FTX’s native FTT token, issued by the exchange to give users a discount on trading fees.

If CoinDesk’s information is correct, it suggests that more than a third of Alameda’s $14.6 billion in assets is held in a cryptocurrency created by FTX. If true, FTX and Alameda are hardly independent of each other – and both companies would have a very shaky foundation.

Bankman-Fried is in trouble

The New York Times reported Tuesday that Bankman-Fried apologized in a memo to FTX employees for not being communicative. He revealed that the company had seen around $6 billion in withdrawals over the previous three days, orders of magnitude greater than the usual level.

“I’m sorry,” he wrote.

Bankman Fried continued his apologies in a Nov. 10 tweet: “At the end of the day, I was the CEO, which means *I* was responsible for making sure things went well. *I* ultimately should have been on top of everything. I clearly failed at that. Sorry.”

Crypto markets have been hit by multiple crises throughout 2022, not to mention funding stress, thanks to rising interest rates and a broader market downturn that has seen investors move away from riskier assets.

FTX’s struggles come in the wake of the TerraUSD fiasco, the meltdown of crypto hedge fund Three Arrows Capital and the failure of crypto lender Celsius Network.