Bitcoin, Ether fall sharply as token linked to FTX falls sharply

by James · November 8, 2022

By Barbara Kollmeyer

The price of bitcoin fell below $20,000 for the first time in nearly four weeks on Tuesday, with Ether also under pressure as a token linked to crypto exchange FTX fell below a crucial level.

Bitcoin was down more than 5% in the past 24 hours to $19,588, heading for its lowest close since Oct. 24, according to CoinDesk data. Ether was down 7.5% over the same period to $1,462, also its lowest since around that date.

The losses for the major cryptos came as the price of FTT , the native symbol of FTX, fell 24% over 24 hours to around $16.37.

Sam Bankman-Fried, CEO of FTX, and Changpeng Zhao, CEO of Binance have been at odds after Zhao said on Sunday that Binance would sell its remaining FTT tokens, with Bankman-Fried responding that “a competitor is trying to go after us with false rumours.”

Read: Tensions rise between crypto exchanges Binance and FTX. What it means for the market

Bankman-Fried’s trading house Alameda Research offered to buy all of these FTT tokens for $22 each. Concerns have been raised about the group’s health and potential spillover to the rest of the crypto space after CoinDesk reported last week that Alameda has a portion of FTT tokens on its balance sheet.

“The selloff in the FTT token has left the entire industry vulnerable again, and major crypto titans like bitcoin and Ethereum are also off balance and moving lower,” Naeem Aslam, market analyst at AvaTrade, said in a note to clients. adding that the pressure could send bitcoin to $15,000 or lower.

“No one and I mean no one wants to see a repeat of what we’ve seen with Celsius and Luna. The crypto industry is already hard hit by the scams perpetrated by companies like Celsius and one more blow out of a major project in the industry is highly likely to create a lot trouble for the industry,” he said.

The collapse of tokens TerraUSD and LUNA earlier this year caused $40 billion in investor losses and rippled through the crypto industry. As part of this fallout, crypto lender Celsius Networks was forced to file for bankruptcy.

Read: The 5 most influential crypto market players in the year when $2 trillion was wiped out

“At the beginning, FTX CEO Sam Bankman-Friedman said they will defend the price of FTT at $22, but they apparently failed and the shock went through the market,” Yuya Hasegawa, crypto market analyst at bitbank, said in emailed comments.

“FTT’s fall is separate from global macro factors and the effect may be short-lived, but if Alameda and FTX’s financial relationship is indeed in jeopardy as rumored, the effect may be short-lived, but the effect could be much larger than today’s market-wide selloff,” the analyst said.

The FTT-Alameda saga became even more complicated on Tuesday after the pressure spilled over to BIT, the original token of the large decentralized autonomous organization BitDAO. According to CoinDesk, Alameda has been asked by the BITDAO community, which includes billionaire Peter Thiel and other funds, for proof that it still holds 100 million BIT tokens.

These were reportedly purchased in November, after Alameda converted 3.36 million FTT tokens.

-Barbara Kollmeyer

(END) Dow Jones Newswires

11-08-22 0900 ET