FTX collapse wipes out billions as investors flee crypto

The collapse of Sam Bankman-Fried’s FTX wiped out billions of dollars in assets as investors fled the troubled cryptocurrency exchange.

The implosion of FTX brought the exchange’s native utility token, FTT, down along with it.

Former CEO of FTX Trading Limited Sam Bankman-Fried speaks during a House Committee on Financial Services | Full Committee Hearing titled Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States on Capitol Hill on Dec. 08, 2021 in Washington, DC.

A report by CoinGecko found that in the days preceding the decision by FTX to halt withdrawals from the exchange, FTT’s price dipped 7% from $24.01 on Nov. 6 to $22.27 on November 7th. CoinGecko provides a fundamental analysis of the digital currency market.

When FTX halted withdrawals the next day, the price of FTT fell to $22.08 with a market capitalization that was about $2.9 billion.

Following FTX’s bankruptcy filing on Nov. 11, the price of FTT dropped precipitously.

FOX BUSINESS APPAs of Nov. 13, FTT’s price plummeted to $2.10 which erased $2.6 billion in market capitalization — a decline of 90.4% to roughly $200 million in market cap — CoinGecko found.

Since then, the price of FTT has continued to slide and was trading at approximately $1.27 on Nov. 23.

Investors’ flight from FTX had broader repercussions for other cryptocurrencies and the exchanges they trade on amid fears a contagion could spread beyond FTX to the broader crypto sector.

After FTX was hit with $7.5 billion in investor withdrawals from Nov. 2 to Nov. 8, the balances of other centralized exchanges dropped by $20.7 billion from $123.6 billion on Nov. 2 to $102.8 billion on Nov. 13, CoinGecko found.

That resulted in a decline of about 16.8% in the balances of the six largest cryptocurrencies, per CoinGecko’s analysis.