• Crypto market in turmoil
• Ups and downs with Bitcoin & Co.
• The reasons for the market turmoil
After Bitcoin had shown relative stability around the US$ 20,000 mark in the past few weeks, there has recently been enormous market turbulence again. The crypto veteran dropped in the direction of 16,000 US dollars, and altcoins such as Ethereum also lost a lot of their value.
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FTX issues shock crypto investors
Problems with the crypto exchange FTX are to blame for the recent turbulence. After the head of competitor exchange Binance, Changpeng Zhao, announced in a series of tweets that his company would sell its holdings in the FTX-owned token due to “revelations”, he and FTX boss Sam exchanged blows Bankman Fried on Twitter.
Although Bankman-Fried tried to dispel doubts about his company’s liquidity, FTX continued to come under pressure in the days that followed, with investors withdrawing massive amounts of money from the crypto exchange.
Ironically, Binance finally jumped in as a rescuer: “This afternoon FTX asked for our help. There is a significant liquidity bottleneck,” Binance boss Changpeng Zhao tweeted on Tuesday. The takeover was then confirmed in another tweet:
1) Hey all: I have a few announcements to make.
Things have come full circle, and https://t.co/DWPootRHcX‘s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for https://t.co/DWPootRHcX (pending DD etc.).
– SBF (@SBF_FTX) November 8, 2022
Cryptocurrencies are crashing across the board – and bouncing back
The planned takeover has caused a huge sell-off in cryptocurrencies. Concerns about the stability of the still relatively young crypto sector arose again. Not only did large digital currencies lose ground, the FTX token also came under massive pressure. In particular, a possible risk of contagion caused investors to flee cryptocurrencies.
Just a day later, cryptocurrencies partially recovered from their massive losses. This was due to rumors that Binance could drop its takeover plans. In fact, the Chinese then announced their withdrawal from the purchase deal and justified this with the latest findings: The difficulties of the trading platform would exceed the company’s ability to help, according to a Binance statement.
However, the recovery tendencies in the meantime are on shaky ground, apparently investors remain critical as far as the stability of the crypto market is concerned. After all, the market already had extremely bad news to digest in 2022: the collapse of the crypto fund Three Arrows Capital as a result of the Terra/LUNA crisis and the subsequent bankruptcies of Voyager Digital and Celsius Network are still in the bones of market participants. At that time, FTX had stepped in as a savior for some of the companies affected, now Sam Bankman-Fried’s company has apparently slipped into a massive tailspin and is said to be on the verge of bankruptcy.
A big name doesn’t protect against bankruptcy, crypto investors have learned that this year. They react accordingly sensitively to possible liquidity problems, which causes high volatility on the crypto market.
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