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Cryptocurrencies Tumbled on News that Binance Would Buy Rival Crypto Exchange FTX
Experts predict “uncomfortable turbulence” in the market due to the conflict between the two giants.
The cryptocurrency market is falling as news of Binance’s potential takeover of rival exchange FTX has fueled traders’ fears that trouble is brewing in the cryptocurrency industry and among some of its top players. If your dream is to become a real trading expert – start your way at bit ai 360.
Bloomberg writes about it
Binance Chief Executive Officer Changpeng Zhao stunned the cryptocurrency world on Tuesday by announcing that his company is set to acquire rival FTX.com, which he says is facing a liquidity crisis.
Bitcoin, the largest token by market value, fell 17% on Tuesday to $17,172, its lowest level since November 2020. The fall saw it drop below some key trading thresholds that investors had previously seen as a boundary.
Almost all tokens were affected, with Ether, Polkadot, and Avalanche down more than 14% each, while Solana and Dogecoin were down more than 28%.
Binance Would Buy Rival Crypto Exchange FTX
FTT, the utility token of crypto exchange giant FTX, fell more than 75% to $4.70 as of 3:30 p.m. in New York, according to CoinMarketCap.com.
“This is related to the recovery of the crisis created by FTX, the recovery of the solvency crisis,” said Strahinja Savich, head of data and analytics at FRNT Financial. “We still don’t know how this story with FTX will end.”
Zhao’s letter of intent to acquire Binance Holdings comes after a bitter feud between the two men spilled into the open after Zhao undermined the credibility of FTX’s finances and facilitated a mass exodus of users from the 3-year-old FTX.com exchange.
The industry giants going head-to-head in a bear market threatens to cause significant upheaval for players in the short term.
“The letter of intent is non-binding, which means there could be additional issues if CZ/Binance decides to back out of the deal,” said David Moreno Darokas, a research fellow at CryptoCompare.
“Turbulence is not only a drop-down but also a sharp spike in the price up, which is not well predicted. Therefore, within a few weeks, we may see a panic sell-off, and then the purchase of assets that have fallen in price by more optimistic investors,” experts note.