Crypto Markets Extend Drop as Doubts About FTX-Binance Deal Grow
Cryptocurrencies extended declines as Binance's potential takeover of embattled rival exchange FTX highlighted how strains in the digital-asset industry are now buffeting some of its top players.
Bitcoin, the largest token by market value, fell as much as 5.4% on Wednesday after a near-10% decline a day earlier and was trading at about $17,700 as of 9:50 a.m. in London. Just about every digital coin was struggling: Ether, Solana, Polkadot, Avalanche, and meme token Dogecoin all dropped.
Binance Chief Executive Officer Changpeng “CZ” Zhao stunned the crypto world on Tuesday with an announcement that his firm was moving to take over rival FTX.com, which suffered a liquidity crunch after Zhao announced that he was selling a $530 million holding of FTX's native token.
Traders cited a Zhao tweet that a letter of intent between the two parties is nonbinding as contributing to the market turmoil. Investors are on edge about spreading contagion given the pivotal role FTX and its co-founder Sam Bankman-Fried played in the industry.
“Since I entered the crypto industry in 2016, very few periods tested its market infrastructure and participants like the last 24 hours did,” said crypto hedge fund manager Dan Liebau of Modular Asset Management.
FTT, the utility token of the FTX exchange, has collapsed by more than 75% in the past 24 hours and was trading around $4.20, according to CoinGecko data.
“The letter of intent is non-binding, which means that further issues could still arise if CZ/Binance decide to back out of the deal,” said David Moreno Darocas, research associate at CryptoCompare.
The letter of acquisition intent by Zhao's Binance Holdings came after a bitter feud between with Bankman-Fried spilled into the open.
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