Cryptocurrency meltdown pauses after FTX and Alameda Implosion

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Bitcoin (BTC), Solana (SOL) and FTX (FTT) prices, charts and analysis:

  • Binance pulls out of potential FTX bailout after looking at books.
  • FTX and Alameda are under strict regulatory control.
  • Liquidity concerns continue to roil the market.

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This week’s collapse of cryptocurrency exchange FTX and sister trading house Alameda sent shockwaves through the crypto market, leaving investors and traders alike with heavy losses on their digital coins and tokens. While the market continues to fear potential liquidity problems, the cryptocurrency market will remain under selling pressure and further losses may occur.

This week’s liquidity crisis at FTX, which appears to have loaned customer deposits to Alameda in an attempt to stem heavy trading losses, left FTX customers unable to withdraw their money from the exchange, with fears now that many of them will not get any of their money back. Another cryptocurrency exchange, Binance, thought about buying FTX’s non-US unit, but quickly backed away from any potential bailout after looking at FTX’s books.

The week started with big withdrawals from FTX over the weekend, sparking a Twitter spat between FTX owner Sam Bankman-Fried and Binance owner and CEO Changpeng Zhao (CZ).

Bitcoin (BTC) Falls as FTX and Binance Spat Hit Market Sentiment

The situation took a turn for the worse after Binance agreed to buy FTX, only to pull out of the deal after looking at FTX’s numbers.

Bitcoin agrees to acquire FTX, bailing out its rival to close a liquidity hole

As the situation turned increasingly sour, the cryptocurrency market sold off further, sending coins and tokens plummeting to multi-month lows and worse. The owner of FTX and Alameda sent out a series of tweets on Thursday, admitting he had ‘f*cked up’ and ‘should have done better’. In his mea culpa, Sam Bankman-Fried admitted to ‘poor internal labeling of bank-related accounts’ and liquidity problems.

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It turns out then according to a story in The Wall Street Journal that FTX had lent customer deposits to its sister company Alameda Research to support its ailing trading business. According to the article, FTX loaned about USD10 billion to Alameda. On Thursday, Sam Bankman-Fried said Alameda was winding down its trading operation.

An article written about a week ago CoinDesk, also revealed that a large portion of Alameda’s balance consisted of FTT tokens issued by FTX. When the value of these tokens collapsed, Alameda’s fate was sealed.

The large losses involved in the FTX/Alameda collapse have prompted swift action by a number of regulatory bodies. The Securities Commission of Bermuda has frozen the assets of the Bahamian subsidiary of FTX, while the SEC and the Department of Justice are now investigating FTX.

The FTX/Alameda collapse sent cryptocurrency prices significantly lower during the week, with the market cap of the space falling by around 20%. The FTT token fell from the mid-$20s to a current level of $3.49 over the past seven days, wiping out billions of dollars…

FTT (FTX) Token Price Chart – November 11

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…while Solana (SOL), one of Alameda’s largest holdings, halved in value during the week amid investor fears that Alameda’s position will be dumped on the market. Solana traded as high as $260 a year ago.

Solana (SOL) Daily Price Chart – November 11, 2022

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Bitcoin was not immune to the market sell-off and at one point broke below $16ki this week, the lowest level in two years. The market has risen marginally and BTC/USD is now trading around $17.4k.

Bitcoin (BTC/USD) Daily Price Chart – November 8, 2022

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Chart via TradingView

What is your view on Bitcoin – bullish or bearish?? You can let us know via the form at the end of this piece, or you can contact the author via Twitter @nickcawley1,



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