The cryptocurrency market is on the edge after Binance hinted that the FTX deal may not go through after all. Bloomberg reported that Binance is unlikely to take over FTX after performing its due diligence. The company discovered a wider gap between FTX’s assets against its liabilities.
The over $6 billion difference might spook CZ, or Changpeng Zhao, from saving FTX. If FTX collapses, many players in the cryptocurrency space, from mining to platforms to the crypto coins, will suffer. The proverbial rising tide that lifts all boats applies. FTX’s decline is the tide that is now receding. As a result, FTX’s issues will reveal what went wrong.
FTX’s collapse will have eerie similarities to the bankruptcy that broke Voyager Digital and Luna crypto in May 2022. Markets will soon learn of the systemic nature of FTX with the rest of the cryptocurrency ecosystem. The crypto market is already anticipating account holders will increase their withdrawals. Bitcoin fell by 6.4% to $17,075, breaking below the critical $20,000 support level. Ethereum lost 10%, trading at $1,171.90.
On the stock exchange, Coinbase (COIN) fell by 8.1% as markets anticipated funding withdrawals and worried about its loss exposure. Robinhood (HOOD) fell by 10%. Silvergate Capital (SI) traded at a 52-week low. Investors are unsure about how much exposure Silvergate has to FTX or FTX Token.
