NEW YORK (Pakistan Point News / Sputnik - 10th November, 2022) The price of Bitcoin has fallen by almost 25% over just four days of trading on investor concerns over an emergency deal between two of cryptocurrency's largest exchanges, Binance and FTX, traders said.
Bitcoin hit a two-year low of $16,112 in Wednesday's trading before rebounding to just under $16,200 towards settlement.
"Binance was expected to save the day and buy FTX.com, but the deal appears to have hit a roadblock," Ed Moya, analyst at online trading platform OANDA, said on Wednesday. "Cryptos are under intense pressure as contagion risks remain elevated from the FTX liquidity crisis. No one wants to touch anything that has ties with FTX and that is troubling news."
Other cryptocurrencies also plunged on Wednesday. FTX's exchange token FTT, plunged more than 70% on the day from $17 to $3, before pulling back above $4 per coin. The second largest cryptocurrency, Ether, tumbled 11% from $1,336 to $1.195 over the past day, media reports said.
Moya cited a CoinDesk report that Binance was unhappy in the due diligence stage after reviewing FTX's internal data and loan commitments. "The stabilization period for crypto is over and now we wait to see if other contagion risks emerge."
The Securities and Exchange Commission is expanding its investigation into FTX's US subsidiary, according to the Wall Street Journal.
"Clearly, something was off because there was a large hole in FTX's balance sheet where they were unable to meet customer deposits," Sean Farrell, head of digital asset strategy with Fundstrat, was quoted as telling Yahoo Finance. "It's likely that it came from co-mingling customer deposits with trading practices of Alameda."
Alameda is majority owned and founded by crypto investor Sam Bankman-Fried and FTX's market maker.
While Binance can still back out of the FTX deal, if the merger of the two of crypto's largest players goes through, it could worsen business competition for other industry firms at a time when trading volumes have tumbled, analysts said.
So far in 2022, total crypto trading volumes worldwide across exchanges have fallen by 20% to $87 trillion, according to data provided by crypto indexing platform Nomics. In that period, Binance accounted for almost 22% of total global crypto trading volume, while FTX held a near 4% share.
