Tension is rising between the crypto exchanges Binance and FTX. What it means for the market.

Tension is rising between the crypto exchanges Binance and FTX.  What it means for the market.

Some investors worry that tensions between major crypto exchanges Binance and FTX could weigh on the digital asset market, which has already suffered from price chaos this year.

Binance is the world’s largest crypto exchange by 24-hour trading volume, while FTX ranks third, according to Coinranking.

On Sunday, Binance founder Changpeng Zhao, commonly known as “CZ,” tweeted that the exchange would begin liquidating the remaining FTT tokens, the original symbol of FTX, held on its books. To limit the market impact, the sale may take a few months to complete, Zhao said.

Binance held about 23 million FTT tokens, worth over $500 million based on the current price, according to a Bloomberg article citing people familiar with the matter. FTT’s total market capitalization is around $3 billion, according to CoinGecko. Binance received the FTT tokens as part of the exit last year from an equity investment in FTX, according to Zhao.

Zhao said the decision to liquidate FTT tokens was due to “recent revelations,” without elaborating on what he was referring to. Representatives at Binance did not respond to a request for comment for this article. Last week, CoinDesk reported that a large portion of the balance sheet held by Alameda Research, the crypto trading firm owned by FTX CEO Sam Bankman-Fried, consisted of FTT tokens.

In response, Alameda Chief Caroline Ellison said via a tweet that information “that has circulated recently” referred to a “specific balance sheet … for a subset of our business units” and that the firm has more than $10 billion in assets that was not reflected in it. In a reply to Zhao’s tweet, she also said offered to buy The FTT tokens from Binance at $22.

See also  Here are 3 reasons why the Ripple XRP price is set for a huge explosion

Bankman-Fried also responded on Twitter on Monday. “A competitor is trying to go after us with false rumours. FTX is fine. Assets are fine,” he wrote. Bankman-Fried did not name the competitor. A representative at FTX declined to comment on the tweet.

Still, some analysts are concerned that the tensions between the two crypto exchanges could spill over into the market, as the nascent industry has already witnessed the collapse of several major players this year, such as blockchain Terra, crypto hedge fund Three Arrows, lender Celsius and digital asset broker Voyager. Bitcoin BTCUSD,
has lost more than 55% of its value so far this year, according to CoinDesk data.

“Tensions between Binance and FTX could raise doubts among the broader crypto industry, including the financial health of Alameda Research and FTX,” said Kevin March, co-founder of Floating Point Group.

“There could be a potential market decline in the meantime. The possibility of short-term profit-taking, combined with FTX FUD (fear, uncertainty and doubt) and the incoming CPI (consumer price index) from the US, could likely spook the market,” March said.

Bitcoin lost 1.7% over the past 24 hours to around $20,812, even as all three major stock indexes rose on Monday, with the Dow Jones Industrial Average DJIA,
advance over 400 points. Cryptocurrencies and stocks are often traded together in recent months.

Meanwhile, FTX could suffer from increased withdrawals, analysts said. FTX’s stablecoin reserves hit an annual low on Monday, down 93% over the past two weeks, indicating low buying pressure, according to data from CryptoQuant. Early Monday, FTX’s hourly withdrawals for ether hit an all-time high, according to CryptoQuant. The FTT token reserve across all exchanges also hit an all-time high on Monday, suggesting increasing selling pressure for the coin.

See also  Buy Waves and Adirize DAO in the middle of the crypto collapse and watch your portfolio potentially grow 10x

“A self-fulfilling prophecy can occur and has potentially already begun,” Michael Agboola, an analyst at digital asset broker GlobalBlock, wrote in a Monday note.

Still, FTT was up 0.1% in the past 24 hours to around $22.38 on Monday, down 12.7% over the past seven days, according to CoinGeko data.

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *