Breaking News
Markets: Bitcoin hits year low, Ether slumps as Binance rescue of FTX unnerves investors
Bitcoin fell to a year’s low of US$17,603 in Tuesday morning trading in Asia as Binance Global Inc.’s takeover of the FTX exchange amid speculation of solvency problems at FTX – one of the world’s most prominent cryptocurrency businesses – unnerved investors. Ether also fell in a broad sell off of the top 10 crypto by market capitalization.
Fast facts
- Bitcoin traded 10.2% lower at US$18,527 in the 24 hours to 8 a.m. in Hong Kong. The benchmark cryptocurrency initially jumped 6% following the announcement of the Binance takeover, but then lost ground amid concerns about FTX’s balance sheet and contagion worries. Ether dropped 15.2% to US$1,330, according to CoinMarketCap.
- BNB, the native token of the blockchain operated by Binance, also fell but its losses were minor compared to the rest of the top 10 crypto, dipping 3.3% to US$326.68.
- Solana was one of the most heavily hit, dropping 19% to US$23.98 — its lowest for the year — while Dogecoin fared even worse, shedding 21.7% to US$0.08.
- Binance CEO Changpeng Zhao and FTX founder and CEO Sam Bankman-Fried announced the purchase overnight on Tuesday amid a liquidity crunch at FTX with the company’s debt accounting for 54% of its assets as of June 30. It also has a majority holding of its native token FTT, which suggests solvency issues as the token lost over 75% of its value before recovering slightly to $5.43.
- FTX was reportedly seeking financing of up to US$6 billion to address the hole in its balance sheet, according to Semafor.
- The woes at FTX are sparking concerns of a broader liquidity crunch akin to what occurred in the multibillion-dollar collapse of the Terra/Luna stablecoin project in May this year, which bankrupted a raft of crypto firms exposed to Terra.
- “Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in,” Bankman-Fried said in a tweet on Wednesday. “It may take a bit to settle etc. — we apologize for that.”
- Zhao initially sparked concerns over FTX’s liquidity via Twitter earlier in the week when he announced the liquidation of FTT from Binance, leading many to believe there was ill will between the two owners. However, Bankman-Fried dismissed those concerns in the same Twitter thread: “I know that there have been rumors in media of conflict between our two exchanges, however Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. We are in the best of hands.”
- Fabian Astic, Managing Director & Head of DeFi & Digital Assets, Moody’s Investors Service said: “The limited transparency and uneven regulation in cryptofinance makes it harder for market participants to make decisions based on a standardized framework. As evidenced in the unfolding events in FTX, crypto players are reacting quicker to news and rumor, which in turn builds up a liquidity crisis much faster than one would have seen in traditional finance.”
- U.S. equities rose Tuesday as voters headed to the polls for the country’s midterm elections, which will determine which party controls the two chambers of Congress for the next two years. The Dow Jones Industrial Average gained 1%, the S&P 500 Index rose 0.6% and the tech-heavy Nasdaq Composite Index finished the day 0.5% higher.
- Top Stories20 hours ago
Breaking: FIRS Officially Launches Recruitment Portal, List Positions
- Politics21 hours ago
Peter Obi Makes U-turn, Sets Record Straight On Church Vigils Statement
- Top Stories21 hours ago
Those Importing PMS Cheaper Than Ours Are Selling Substandard Products – Dangote
- News21 hours ago
Ondo Decides2024: You’ve destroyed Akeredolu’s legacy – Ajayi tells Aiyedatiwa
- Top Stories19 hours ago
#USDecides2024: Bill Clinton has hopes and fears on what comes after 2024 …
- Entertainment21 hours ago
AMAA 2024: Femi Adebayo’s ‘Jagun Jagun’ bags 3 awards
- Entertainment19 hours ago
Miami Beach officially revokes Diddy’s Key to the City
- Top Stories10 hours ago
Breaking: Tinubu Directs Release Of Minors Arraigned For Hunger Protests