2022-11-8 00:09 |
The uncertainty over the weekend over the balance sheets of FTX and Alameda weighed negatively on crypto prices as the week opened.
The rally of the wider digital assets market was cut short following the reports of a dire financial situation of FTX and Alameda Research. Solana (SOL), a cryptocurrency backed by both entities, fell by nearly 12% in 24 hours, while FTT, the exchange token of FTX, slumped by 5%.
BNB lost nearly 5% while the trion of Bitcoin (BTC), Ethereum (ETH), and Dogecoin (DOGE) shed 2.47%, 2.54%, and 6.30% in a chaotic start to the new week. The global crypto market cap is tethering at the $1.03 trillion mark, falling by 2.04% over the last day.
Analysts posit that FTT could slump even further, given the surge in exchange balances of the token. Typically, a spike in exchange balances is considered to be a signal that investors are looking to sell their tokens.
While token holders navigate the uncertainties, FTX is facing its fair share of troubles. The digital asset exchange has recorded an increase in exchange outflows, with a staggering 292 million in stablecoins leaving the platform, according to data from Nansen.
The fiasco plaguing FTXOver the weekend, it was revealed that the bulk of Alameda’s balance sheet comprises FTT tokens issued by FTX. While this does not contravene any laws, it raises some doubts in an industry still reeling from the collapse of several projects like Terra, Three Arrows Capital (3AC), and Celsius.
“It is fascinating to see that the majority of the net equity in the Alameda business is actually FTX’s own centrally controlled and printed-out-of-thin-air-token,” noted Cory Klippsten, Swan Bitcoin CEO.
In response, Binance CEO Changpeng Zhao noted that his firm would be selling all its holdings of the FTT token while noting that it is not a move targeted against a competitor but to safeguard users.
“Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books,” said Zhao. “We will try to do so in a way that minimizes market impact. Due to market conditions and limited liquidity, we expect this will take a few months to complete.”
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