Bitcoin price briefly fell below $17,000 on Wednesday, remaining at a two-year low, as investors await the outcome. An emergency deal has been concluded Between two of the largest cryptocurrency exchanges, Binance and FTX.
Bitcoin plunged as much as $16,939 just before midday, its lowest point since November 2020, according to the crypto-indexing platform. CF . Standard. It recovered above $17,100 but remains down 12% over the past 24 hours.
The pullback comes as the unexpected deal – far from a stone in a non-binding letter of intent – has raised concerns among investors and analysts that FTX problems could spread across the crypto world. a Coindesk Report Wednesday Morning And raised doubts, citing unnamed sources, that the deal will take place.
A Binance spokesperson told Yahoo Finance, “We are only 36 hours in the due diligence phase. We will provide further feedback when we have something more substantive to share.”
FTX declined to comment on the matter.
Other cryptocurrencies also fell on Wednesday.
The second largest cryptocurrency, ether (ETH-USDIt sold 28% over the past day from $1,448 to $1,180. FTX exchange code FTT, by up to 71% on the day from $17 to $3. It is now trading above $4.3 per coin.
Cryptocurrency Solana (SOL), backed by FTX founder and CEO Sam Bankman-Fried and quickly plummeting in the cryptocurrency rankings by market capitalization, has sold more than 44% in the past 24 hours from $28.19 to $17.
In the past 24 hours, the total market capitalization of all crypto assets has fallen by more than 18% from $980 billion to $844 billion, according to Queen Market Cap and Yahoo Finance charts.
The deal marks one of the bleakest days for cryptocurrencies during a tough year for the markets. This came as bullish cryptocurrency exchange FTX faced a “major liquidity crunch,” Binance CEO Changpeng Zhao said in a tweet Tuesday, forcing the rival exchange to temporarily halt customer withdrawals on Tuesday morning.
“FTX leader Sam Bankman Fried has been the white knight who has been saving companies throughout most of the crypto winter,” Edward Moya, chief market analyst at Oanda, told Yahoo Finance on Tuesday. It makes a lot of people nervous because more pain may come.”
“There is a lot of concern that contagion risks and other liquidity problems are lurking,” Moya added.
While Binance can still pull back from the FTX deal, if the two biggest crypto players merge, it could exacerbate the trading competition for other industry firms at a time when trading volumes are dwindling, according to analysts.
So far in 2022, the total volume of cryptocurrency trading worldwide has fallen by 20% to $87 trillion, according to the cryptocurrency indexing platform. Nomex. In that period, Binance accounted for 21.7% of the total global crypto trading volume, while FTX held a 3.96% share.
Coinbase Global Shares (Currency), one of the two firms’ competitors, rose more than 10% Wednesday morning from $50.83 to $46, even after Coinbase CEO Brian Armstrong He said via Twitter that the company “has no physical exposure to FTX or FTT (and no exposure to Almeda),” and the competition appears to be less favorable for the major exchange.
However, Dan Dolev, chief analyst at Mizuho Securities, wrote in a note that “the rapid collapse of the crypto exchange demonstrates how volatile the cryptocurrency industry is. This is a red flag for COIN, as the vast majority of revenue comes from cryptocurrency trading.” Tokens “.
After dropping 19.3% on Tuesday, Robinood (HOOD) shares are down more than 10% Wednesday morning from $9.7 to $8.7. Bankman-Fried holds a 7.6% stake in the stock and cryptocurrency trading platform, according to May SEC filing.
However, Dolev downplayed the “volatile” reaction for the day, noting that unlike Coinbase, Robinhood only earns 12% of its revenue from crypto transactions.
As for other affected companies, Pranav Kanadi, portfolio manager at VanEck Digital Assets, told Yahoo Finance that the question that remains is whether the liquidity crunch in FTX was caused by bad debts.
“You could argue that a lot of leverage was taken out of the system in May and June of this year, but a lot of that was resolved by bailing out these companies to some extent,” Cannady said. “If there are bad debts, how many are they and who are those other entities?”
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David Hollerith is a senior reporter at Yahoo Finance covering the cryptocurrency and stock markets. Follow him on Twitter at Tweet embed
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